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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): December 10, 1999
iLink Telecom, Inc.
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(Exact name of Registrant as specified in its charter)
Nevada 333-84845 98-0207906
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(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
1942 Williamsbridge Road, Bronx, New York 10461
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(Address of principal executive offices, including Zip Code)
Registrant=s telephone number, including area code: (718) 792-5150
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1177 West Hastings Street, Suite 1910, Vancouver, British Columbia V6E 2K3
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(Former name or former address if changed since last report.)
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Item 1. Changes in Control of Registrant
On December 10, 1999, the Registrant entered into an Agreement and Plan of
Merger among the Registrant, 9278 Acquisition Corp., a wholly-owned subsidiary
of the Registrant ("Acquisition Corp."), and 9278 Distributor Inc., a New York
Corporation ("9278"), pursuant to which 9278 was merged with and into
Acquisition Corp., thereby becoming a wholly-owned subsidiary of Registrant. As
a result of such Merger, the shareholders of Acquisition Corp. were issued an
aggregate of 14,900,000 shares of common stock of the Registrant, as well as
$1,000,000 and a promissory note in the amount of $2,000,000. Of such shares,
13,200,000 were issued to Sajid Kapadia, President and Chief Executive Officer
of 9278. In addition to such shares, Mr. Kapadia has been granted proxies vote
an aggregate of 2,150,000 additional shares of common stock of the Registrant.
As a result of such shareholdings and proxies, Mr. Kapadia currently has the
right to vote approximately 78% of the outstanding common stock of the
Registrant. In connection with the Merger, certain members of management agreed
to forgive 1,750,000 shares of common stock of the Registrant which were subject
to issuance under existing agreements with the Registrant. As a result of such
transactions, the aggregate number of issued and outstanding shares of the
Registrant increased to 19,659,629 shares.
The cash portion of the Merger consideration was obtained by the
Registrant through a private placement of its common stock and a private
placement of Series B Convertible Preferred Stock, as described below under Item
5.
Item 2. Acquisition or Disposition of Assets
See Item 1 and Item 5.
Item 5. Other Events
On December 10, 1999, the Registrant completed the two private placements.
The Registrant sold 500,000 shares of its common stock at a purchase price of
$2.00 per share to one investor. In addition, the Registrant sold an aggregate
of 1,500 shares of Series B Convertible Preferred stock at a purchase price of
$1,000 per share. The Series B Convertible Preferred Stock is convertible into
shares of common stock of the Registrant based on a per share conversion price
equal to 75% of the prevailing market price of the common stock for the ten
trading days prior to conversion; provided however that through January 24,
2000, the holders of the Series B Convertible Preferred Stock will have the
right to convert such shares using a conversion price of not more than $3.7031
per share.
Item 7. Financial Statements, Pro Forma Financial Information
(a) Financial Statements of Business to be Acquired
(b) Pro Forma Financial Information
The financial statements required by items (a) and (b) shall be filed by
the Registrant not later than 60 days after the date that this report on
Form 8-K was required to be filed.
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(c) Exhibits
2.1 Agreement and Plan of Merger among the Registrant, 9278 Acquisition
Corp. and 9278 Distributor Inc.
4.1 Certificate of Designation setting forth rights and preferences of
Series B Convertible Preferred Stock
4.2 Form of Subscription Agreement for common stock
4.3 Form of Subscription Agreement for Series B Convertible Preferred
Stock
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: December 23, 1999 iLINK TELECOM INC.
(Registrant)
By: /s/ Sajid Kapadia
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Sajid Kapadia
Chief Executive Officer
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made as of the 10th day of December, 1999.
AMONG:
ILINK TELECOM INC., a body corporate formed pursuant to the laws of
the State of Nevada and having an office for business located at 666
Burrard Street, Suite 1170, Vancouver, British Columbia V6C 2X8
("iLink")
AND:
9278 DISTRIBUTOR ACQUISITION CORPORATION, a body corporate formed
pursuant to the laws of the State of New York and a wholly-owned
subsidiary of iLink
(the "Acquirer")
AND:
9278 DISTRIBUTOR INC., a body corporate formed pursuant to the laws
of the State of New York and having an office for business located
at 1942 Williamsbridge Road, Bronx, New York 10461
(the "Company")
WHEREAS:
A. the Company is engaged in the business of wholesaling prepaid phone cards;
B. iLink is engaged in the business of providing customized
telecommunications switching solutions;
C. the respective Boards of Directors of the Company and the Acquirer deem it
advisable and in the best interests of iLink, the Company and the Acquirer
that the Company merge with and into the Acquirer (the "Merger") pursuant
to this Agreement and the Certificate of Merger, and the applicable
provisions of the laws of the State of New York; and
D. it is intended that the Merger shall qualify for Federal income tax
purposes as a reorganization within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended.
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the premises
and the mutual covenants, agreements, representations and warranties contained
herein, the parties hereto hereby agree as follows:
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ARTICLE 1
DEFINITIONS AND INTERPRETATION
Definitions
1.1 In this Agreement the following terms will have the following meanings:
(a) "Acquirer" means 9278 Distributor Acquisition Corporation;
(b) "Acquisition Price" means the sum of $3,000,000 to be delivered to
the Sajid Kapadia by iLink at Closing and consisting of the Cash
Acquisition Price and the Promissory Note;
(c) "Acquisition Shares" means the 14,900,000 iLink Shares to be issued
to the Company Shareholders at Closing;
(d) "Agreement" means this agreement and plan of merger among iLink, the
Acquirer and the Company;
(e) "Audited Company Financial Statements" means the audited financial
statements of the Company for the fiscal year ended December 31,
1998, together with the unqualified auditors' report thereon, a true
copy of which is attached as Schedule "A" hereto;
(f) "Audited iLink Financial Statements" means the audited financial
statements of iLink for the fiscal year ended February 28, 1999,
together with the unqualified auditors' report thereon, a true copy
of which is attached as Schedule "J" hereto;
(g) "Business of iLink" means all aspects of the business conducted by
iLink, including, without limitation, providing customized
telecommunications switching solutions;
(h) "Business of the Company" means all aspects of the business
conducted by the Company, including, without limitation, wholesaling
prepaid phone cards;
(i) "Cash Acquisition Price" means the sum of $1,000,000 to be paid to
Sajid Kapadia by iLink at Closing in partial payment of the
Acquisition Price;
(j) "Century Capital Consulting Agreement" means the consulting
agreement dated December 6, 1999 between iLink and Century Capital
Management Ltd. a copy of which in included in Schedule "Q" attached
hereto;
(k) "Closing" means the completion, on the Closing Date, of the
transactions contemplated hereby in accordance with Article 11
hereof;
(l) "Closing Date" means the day on which all conditions precedent to
the completion of the transaction as contemplated hereby have been
satisfied or waived; provided that in no event shall the Closing
Date be later than December 31, 1999;
(m) "Company" means 9278 Distributor Inc.;
(n) "Company Accounts Payable and Liabilities" means all accounts
payable and liabilities of the Company due and owing or otherwise
constituting a binding
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3
obligation of the Company and/or its affiliates (other than a
Company Material Contract) as of November 30, 1999 as set forth is
Schedule "C" hereto;
(o) "Company Accounts Receivable" means all accounts receivable owing to
the Company as of November 30, 1999 as set forth in Schedule "D"
hereto;
(p) "Company Assets" means the undertaking and all the property and
assets of the Business of the Company of every kind and description
wherever situated including, without limitation, the Company
Equipment, the Company Inventory, the Company Material Contracts,
the Company Accounts Receivable, the Company Cash, the Company
Intangible Assets and the Company Goodwill, and all credit cards,
charge cards and banking cards issued to the Company;
(q) "Company Bank Accounts" means all of the bank accounts, lock boxes
and safety deposit boxes of the Company or relating to the Business
of the Company as set forth in Schedule "I" hereto;
(r) "Company Cash" means all cash on hand or on deposit to the credit of
the Company on the Closing Date;
(s) "Company Equipment" means all machinery, equipment, furniture, and
furnishings used in the Business of the Company, including, without
limitation, the items more particularly described in Schedule "E"
hereto;
(t) "Company Financial Statements" means, collectively, the Audited
Company Financial Statements and the Quarterly Company Financial
Statements;
(u) "Company Goodwill" means the goodwill of the Business of the Company
together with the exclusive right of iLink to represent itself as
carrying on the Business of the Company in succession of the Company
subject to the terms hereof, and the right to use any words
indicating that the Business of the Company is so carried on
including the right to use the name "9278 Distributors" or any
variation thereof as part of the name of or in connection with the
Business of the Company or any part thereof carried on or to be
carried on by the Company, the right to all corporate, operating and
trade names associated with the Business of the Company, or any
variations of such names as part of or in connection with the
Business of the Company, all telephone listings and telephone
advertising contracts, all lists of customers, books and records and
other information relating to the Business of the Company, all
necessary licenses and authorizations and any other rights used in
connection with the Business of the Company;
(v) "Company Insurance Policies" means the public liability insurance
and insurance against loss or damage to the Company Assets and the
Business of the Company as described in Schedule "F" hereto;
(w) "Company Intangible Assets" means all of the intangible assets of
the Company, including, without limitation, the Company Goodwill,
all trademarks, logos, copyrights, designs, and other intellectual
and industrial property of the Company and including, without
limitation, the Kick Code 10-10-9278;
(x) "Company Inventory" means all inventory and supplies of the Business
of the Company as of November 30, 1999 as set forth in Schedule "G"
hereto;
(y) "Company Material Contracts" means the burden and benefit of and the
right, title and interest of the Company in, to and under all trade
and non-trade
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4
contracts, engagements or commitments, whether written or oral, to
which the Company is entitled in connection with the Business of the
Company whereunder the Company is obligated to pay or entitled to
receive the sum of $10,000 or more including, without limitation,
any pension plans, profit sharing plans, bonus plans, loan
agreements, security agreements, indemnities and guarantees, any
agreements with employees, lessees, licensees, managers,
accountants, suppliers, agents, distributors, officers, directors,
attorneys or others which cannot be terminated without liability on
not more than one month's notice, and those contracts listed in
Schedule "H" hereto;
(z) "Company Shareholders" means Sajid Kapadia, KAPH Groups, Inc.,
Abbott & Co. and P.T.N. Ltd.
(aa) "Company Shares" means all of the issued and outstanding shares of
the Company's equity stock;
(bb) "Employment Agreement" means the employment agreement between the
Company and Sajid Kapadia to be entered into pursuant to Article 8
hereof substantially in the form attached hereto as Schedule "R";
(cc) "iLink" means iLink Telecom, Inc.;
(dd) "Effective Time" means the date of the filing of an appropriate
Certificate of Merger in the form required by the State of New York,
which certificate shall provide that the Merger shall become
effective upon such filing;
(ee) "iLink Accounts Payable and Liabilities" means all accounts payable
and liabilities of iLink due and owing or otherwise constituting a
binding obligation of iLink and/or its affiliates (other than an
iLink Material Contract) as of November 30, 1999 as set forth is
Schedule "L" hereto;
(ff) "iLink Accounts Receivable" means all accounts receivable and other
debts owing to iLink as of November 30, 1999 as set forth in
Schedule "M" hereto;
(gg) "iLink Assets" means the undertaking and all the property and assets
of the Business of iLink of every kind and description wheresoever
situated including, without limitation, iLink Equipment, iLink
Material Contracts, iLink Accounts Receivable, iLink Cash, iLink
Intangible Assets and iLink Goodwill, and all credit cards, charge
cards and banking cards issued to iLink;
(hh) "iLink Bank Accounts" means all of the bank accounts, lock boxes and
safety deposit boxes of iLink or relating to the Business of iLink
as set forth in Schedule "N" hereto;
(ii) "iLink Cash" means all cash on hand or on deposit to the credit of
iLink on the Closing Date;
(jj) "iLink Common Shares" means the shares of common stock in the
capital of iLink;
(kk) "iLink Equipment" means all machinery, equipment, furniture, and
furnishings used in the Business of iLink, including, without
limitation, the items more particularly described in Schedule "O"
hereto;
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(ll) "iLink Financial Statements" means, collectively, the Audited iLink
Financial Statements and the Quarterly iLink Financial Statements;
(mm) "iLink Goodwill" means the goodwill of the Business of iLink
including the right to all corporate, operating and trade names
associated with the Business of iLink, or any variations of such
names as part of or in connection with the Business of iLink, all
telephone listings and telephone advertising contracts, all lists of
customers, books and records and other information relating to the
Business of iLink, all necessary licenses and authorizations and any
other rights used in connection with the Business of iLink;
(nn) "iLink Insurance Policies" means the public liability insurance and
insurance against loss or damage to iLink Assets and the Business of
iLink as described in Schedule "P" hereto;
(oo) "iLink Intangible Assets" means all of the intangible assets of
iLink, including, without limitation, iLink Goodwill, all
trademarks, logos, copyrights, designs, and other intellectual and
industrial property of iLink;
(pp) "iLink Material Contracts" means the burden and benefit of and the
right, title and interest of iLink in, to and under all trade and
non-trade contracts, engagements or commitments, whether written or
oral, to which iLink is entitled in connection with the Business of
iLink whereunder iLink is obligated to pay or entitled to receive
the sum of $10,000 or more including, without limitation, any
pension plans, profit sharing plans, bonus plans, loan agreements,
security agreements, indemnities and guarantees, any agreements with
employees, lessees, licensees, managers, accountants, suppliers,
agents, distributors, officers, directors, attorneys or others which
cannot be terminated without liability on not more than one month's
notice, and those contracts listed in Schedule "Q" hereto;
(qq) "Merger Consideration" means the Acquisition Shares and the
Acquisition Price;
(rr) "Place of Closing" means the offices of Parker Duryee Rosoff & Haft
or such other place as iLink and the Company may mutually agree
upon;
(ss) "Preferred Shares" means the shares of Series B Convertible
Preferred Stock in the capital of iLink;
(tt) "Private Placement" means the private sale by iLink of up to 1,500
Preferred Shares at a price of $1,000.00 per Preferred Share and up
to 500,000 Common Shares at a price of $2.00 per Common Share;
(uu) "Promissory Note" means the promissory note in the amount of
$2,000,000 in favour of Sajid Kapadia to be delivered to Sajid
Kapadia at Closing by iLink in partial payment of the Acquisition
Price, substantially in the form attached hereto as Schedule "T";
(vv) "Quarterly Company Financial Statements" means the unaudited
financial statements of the Company for the nine month period ended
September 30, 1999, a true copy of which are attached as Schedule
"B" hereto;
(ww) "Quarterly iLink Financial Statements" means the unaudited financial
statements of iLink for the six month period ended August 31, 1999,
a true copy of which are attached as Schedule "K" hereto;
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(xx) "Schriber Agreement" means the Agreement to Issue Shares between
iLink and Peter Schriber dated December 10, 1999, a copy of which is
included as Schedule "Q" attached hereto;
(yy) "State Corporation Law" means the Business Corporation Law of the
State of New York;
(zz) "Subscription Agreements" means the form of subscription agreements
to be used in the Private Placement, substantially in the form
attached hereto as Schedule "S"; and
(aaa) "Surviving Company" means the Acquirer following the merger with the
Company.
Any other terms defined within the text of this Agreement will have the meanings
so ascribed to them.
Captions and Section Numbers
1.2 The headings and section references in this Agreement are for convenience of
reference only and do not form a part of this Agreement and are not intended to
interpret, define or limit the scope, extent or intent of this Agreement or any
provision thereof.
Section References and Schedules
1.3 Any reference to a particular "Article", "section", "paragraph", "clause" or
other subdivision is to the particular Article, section, clause or other
subdivision of this Agreement and any reference to a Schedule by letter will
mean the appropriate Schedule attached to this Agreement and by such reference
the appropriate Schedule is incorporated into and made part of this Agreement.
The Schedules to this Agreement are as follows:
Information concerning the Company
Schedule "A" Audited Company Financial Statements
Schedule "B" Quarterly Company Financial Statements
Schedule "C" Company Accounts Payable and Liabilities
Schedule "D" Company Accounts Receivable
Schedule "E" Company Equipment
Schedule "F" Company Insurance Policies
Schedule "G" Company Inventory
Schedule "H" Company Material Contracts
Schedule "I" Company Bank Accounts
Schedule "I-A" Company Litigation
Information concerning iLink
Schedule "J" Audited iLink Financial Statements
Schedule "K" Quarterly iLink Financial Statements
Schedule "L" iLink Accounts Payable and Liabilities
Schedule "M" iLink Accounts Receivable
Schedule "N" iLink Bank Accounts
Schedule "O" iLink Equipment
Schedule "P" iLink Insurance Policies
Schedule "Q" iLink Material Contracts
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Schedule "Q-A" iLink Trademark Infringements
Agreements
Schedule "R" Employment Agreement
Schedule "S" Subscription Agreements
Note
Schedule "T" Promissory Note
Other Schedule "U" Share Ownership and Allocation of Merger
Consideration
Guaranty Schedule "V" Guaranty of Acquirer
Severability of Clauses
1.4 If any part of this Agreement is declared or held to be invalid for any
reason, such invalidity will not affect the validity of the remainder which will
continue in full force and effect and be construed as if this Agreement had been
executed without the invalid portion, and it is hereby declared the intention of
the parties that this Agreement would have been executed without reference to
any portion which may, for any reason, be hereafter declared or held to be
invalid.
ARTICLE 2
THE MERGER
The Merger
2.1 At Closing, the Company shall be merged with and into the Acquirer pursuant
to this Agreement and the Plan of Merger and the separate corporate existence of
the Company shall cease and the Acquirer, as it exists from and after the
Closing, shall be the Surviving Company.
Effect of the Merger
2.2 The Merger shall have the effect provided therefor by the State Corporation
Law. Without limiting the generality of the foregoing, and subject thereto, at
Closing (i) all the rights, privileges, immunities, powers and franchises, of a
public as well as of a private nature, and all property, real, personal and
mixed, and all debts due on whatever account, including without limitation
subscriptions to shares, and all other choses in action, and all and every other
interest of or belonging to or due to the Company or the Acquirer, as a group,
subject to the terms hereof, shall be taken and deemed to be transferred to, and
vested in, the Surviving Company without further act or deed; and all property,
rights and privileges, immunities, powers and franchises and all and every other
interest shall be thereafter as effectually the property of the Surviving
Company, as they were of the Company and the Acquirer, as a group, and (ii) all
debts, liabilities, duties and obligations of the Company and the Acquirer, as a
group, subject to the terms hereof, shall become the debts, liabilities and
duties of the Surviving Company and the Surviving Company shall thenceforth be
responsible and liable for all debts, liabilities, duties and obligations of the
Company and the Acquirer, as a group, and neither the rights of creditors nor
any liens upon the property of the Company or the Acquirer, as a group, shall be
impaired by the Merger, and may be enforced against the Surviving Company.
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Articles of Incorporation; Bylaws; Directors and Officers
2.3 The Articles of Incorporation of the Surviving Company from and after the
Closing shall be the Articles of Incorporation of the Acquirer until thereafter
amended in accordance with the provisions therein and as provided by the
applicable provisions of the State Corporation Law. The Bylaws of the Surviving
Company from and after the Closing shall be the Bylaws of the Acquirer as in
effect immediately prior to the Closing, continuing until thereafter amended in
accordance with their terms, the Articles of Incorporation of the Surviving
Company and as provided by the State Corporation Law. The Directors of the
Company at the Effective Time shall continue to be the Directors and the
Officers of the Company at the Effective Time shall continue to be the Officers
of the Surviving Company.
Conversion of Securities
2.4 At the Effective Time, by virtue of the Merger and without any action on the
part of the Acquirer, the Company or the Company Shareholders, the shares of
capital stock of each of the Company and the Acquirer shall be converted as
follows:
(a) Capital Stock of the Acquirer. Each issued and outstanding share of
the Acquirer's capital stock shall continue to be issued and
outstanding and shall be converted into one share of validly issued,
fully paid, and non-assessable common stock of the Surviving
Company. Each stock certificate of the Acquirer evidencing ownership
of any such shares shall continue to evidence ownership of such
shares of capital stock of the Surviving Company.
(b) Conversion of Company Shares. Each Company Share that is issued and
outstanding at the Effective Time shall automatically be cancelled
and extinguished and converted, without any action on the part of
the holder thereof, into the right to receive at the time and in the
amounts described in this Agreement (i) an amount of cash equal to
the Acquisition Price divided by the number of shares of Company
Shares outstanding immediately prior to the Time of Closing and (ii)
an amount of Acquisition Shares equal to the number of Acquisition
Shares divided by the number of Company Shares outstanding
immediately prior to Closing. All such Company Shares, when so
converted, shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and each holder of a
certificate representing any such shares shall cease to have any
rights with respect thereto, except the right to receive the
Acquisition Shares and the Acquisition Price paid in consideration
therefor upon the surrender of such certificate in accordance with
this Agreement.
ARTICLE 3
REGISTRATION RIGHTS
3.1 As soon as practicable after the Closing iLink shall file a registration
statement on Form SB-2 (or similar form) under the Securities Act of 1933 and
under all applicable Blue Sky laws covering not more than 3,400,000 of the
Acquisition Shares and will use its best efforts to cause such registration
statement to be declared effective by the Securities and Exchange Commission at
the earliest practicable date, all at iLink's sole cost and expense. Such best
efforts shall include responding to all comments received by the staff of the
Securities and Exchange Commission and promptly preparing and filing amendments
to such registration statement which are responsive to the comments received
from the staff of the Securities and Exchange
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9
Commission. Such registration statement shall provide for the sale of up to
3,400,000 of the Acquisition Shares being registered and sold from time to time
directly to purchasers or in the over-the-counter market or through or to
securities brokers or dealers that may receive compensation in the form of
discounts, concessions, or commissions or in other public or private
transactions. None of the foregoing shall in any way limit the Company
Shareholders' rights to sell the Acquisition Shares in reliance on an exemption
from the registration requirements under the Securities Act of 1933 in
connection with a particular transaction.
3.2 iLink shall use its best efforts to maintain the currency of the
registration statement filed with the Securities and Exchange Commission and
under all applicable Blue Sky laws in respect of the Acquisition Shares being
registered until such time as deemed necessary to complete the distribution
thereof by a majority of the Company Shareholders, but in no event shall iLink
be required to maintain such effectiveness beyond the date which is twelve
months following the effective date thereof.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY
Representations and Warranties
The Company represents and warrants in all material respects to iLink and
the Acquirer, with the intent that iLink will rely thereon in entering into this
Agreement and in completing the transactions contemplated hereby, that:
The Company - Corporate Status and Capacity
(a) Incorporation. The Company is a corporation duly incorporated and
validly subsisting under the laws of the State of New York, and is
in good standing with the office of the Secretary of State of the
State of New York;
(b) Carrying on Business. The Company carries on business primarily in
the States of New York, New Jersey, and Connecticut and does not
carry on any material business activity in any other jurisdiction.
The Company has an office in Bronx, New York and in no other
locations. The nature of the Business of the Company does not
require the Company to register or otherwise be qualified to carry
on business in any other jurisdiction;
(c) Corporate Capacity. The Company has the corporate power, capacity
and authority to own the Company Assets, to carry on the Business of
the Company and to enter into and complete this Agreement;
The Company - Capitalization
(d) Authorized Capital. The authorized capital of the Company consists
of 200 shares without par value;
(e) Ownership of Company Shares. The issued and outstanding share
capital of the Company will on Closing consist of 200 shares (being
the Company Shares), which shares on Closing shall be validly issued
and outstanding as fully paid and non-assessable shares. The Company
Shareholders will be at Closing the registered and beneficial owner
of all of the Company Shares. The Company Shareholders own and will
on Closing own the Company Shares free and clear of
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10
any and all liens, charges, pledges, encumbrances, restrictions on
transfer and adverse claims whatsoever;
(f) No Option. No person, firm or corporation has any agreement, option,
warrant, preemptive right or any other right capable of becoming an
agreement or option for the acquisition of the Company Shares or for
the purchase, subscription or issuance of any of the unissued shares
in the capital of the Company;
(g) No Restrictions. There are no restrictions on the transfer, sale or
other disposition of the Company Shares contained in the charter
documents of the Company or under any agreement;
The Company - Records and Company Financial Statements
(h) Charter Documents. The charter documents of the Company have not
been altered since the incorporation of the Company, except as filed
in the record book of the Company;
(i) Corporate Minute Books. The corporate minute books of the Company
are complete and each of the minutes contained therein accurately
reflect the actions that were taken at a duly called and held
meeting or by consent without a meeting. All actions by the Company
which required director or shareholder approval are reflected on the
corporate minute books of the Company. The Company is not in
violation or breach of, or in default with respect to, any term of
its Certificate of Incorporation (or other charter documents) or
by-laws.
(j) Company Financial Statements. The Company Financial Statements
present fairly, in all material respects, the assets and liabilities
(whether accrued, absolute, contingent or otherwise) of the Company
as of the respective dates thereof, and the sales and earnings of
the Business of the Company during the periods covered thereby, in
all material respects, and have been prepared in substantial
accordance with generally accepted accounting principles
consistently applied;
(k) Company Accounts Payable and Liabilities. There are no material
liabilities, contingent or otherwise, of the Company which are not
disclosed in Schedules "C" or "I-A" hereto or reflected in the
Company Financial Statements except those incurred in the ordinary
course of business since the date of the said schedule and the
Quarterly Company Financial Statements, and the Company has not
guaranteed or agreed to guarantee any debt, liability or other
obligation of any person, firm or corporation. Without limiting the
generality of the foregoing, all accounts payable and liabilities of
the Company as at November 30, 1999 are described in Schedule "C"
hereto;
(l) Company Accounts Receivable. All Company Accounts Receivable result
from bona fide business transactions and services actually rendered
without, to the knowledge and belief of the Company, any claim by
the obligor for set-off or counterclaim;
(m) Company Bank Accounts. All of the Company Bank Accounts, their
location, numbers and the authorized signatories thereto are as set
forth in Schedule "I" hereto;
(n) No Debt to Related Parties. The Company is not, and on Closing will
not be, materially indebted to the Company Shareholders nor to any
family member
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thereof, nor to any affiliate, director or officer of the Company or
the Company Shareholders except accounts payable on account of bona
fide business transactions of the Company incurred in normal course
of the Company Business, none of which are more than 30 days in
arrears;
(o) No Related Party Debt to the Company. The Company Shareholders is
not now indebted to or under any financial obligation to the Company
on any account whatsoever, except for advances on account of travel
and other expenses not exceeding $5,000 in total;
(p) No Dividends. No dividends or other distributions on any shares in
the capital of the Company have been made, declared or authorized
since the date of the Quarterly Company Financial Statements except
for a dividend of $65,000 declared in November 1999;
(q) No Payments. No payments of any kind have been made or authorized
since the date of the Quarterly Company Financial Statements to or
on behalf of the Company Shareholders or to or on behalf of
officers, directors, shareholders or employees of the Company or
under any management agreements with the Company, except (1)
payments made in the ordinary course of business and at the regular
rates of salary or other remuneration payable to them, (2) a
dividend of $65,000, and (3) the repayment of approximately $235,000
of indebtedness to a shareholder;
(r) No Pension Plans. There are no pension, profit sharing, group
insurance or similar plans or other deferred compensation plans
affecting the Company;
(s) No Adverse Events. Since the date of the Quarterly Company Financial
Statements and except as set forth in Schedule "I-A" hereto:
(i) there has not been any material adverse change in the
financial position or condition of the Company, its
liabilities or the Company Assets or any damage, loss or other
change in circumstances materially affecting the Company, the
Business of the Company or the Company assets or the Company's
right to carry on the Business of the Company, other than
changes in the ordinary course of business,
(ii) there has not been any damage, destruction, loss or other
event (whether or not covered by insurance) materially and
adversely affecting the Company, the Business of the Company
or the Company Assets,
(iii) there has not been any material increase in the compensation
payable or to become payable by the Company to the Company
Shareholders or to any of the Company's officers, employees or
agents or any bonus, payment or arrangement made to or with
any of them,
(iv) the Business of the Company has been and continues to be
carried on in the ordinary course,
(v) the Company has not waived or surrendered any right of
material value.
(vi) the Company has not discharged or satisfied or paid any lien
or encumbrance or obligation or liability other than current
liabilities in the ordinary course of business, and
<PAGE>
12
(vii) no capital expenditures in excess of $100,000 individually or
$300,000 in total have been authorized or made;
The Company - Income Tax Matters
(t) Tax Returns. All tax returns and reports of the Company required by
law to be filed have been filed and are true, complete and correct,
and any taxes payable in accordance with any return filed by the
Company or in accordance with any notice of assessment or
reassessment issued by any taxing authority have been so paid;
(u) Current Taxes. Adequate provisions have been made for taxes payable
for the current period for which tax returns are not yet required to
be filed and there are no agreements, waivers, or other arrangements
providing for an extension of time with respect to the filing of any
tax return by, or payment of, any tax, governmental charge or
deficiency by the Company. The Company is not aware of any
contingent tax liabilities or any grounds which would prompt a
reassessment including aggressive treatment of income and expenses
in filing earlier tax returns;
The Company - Applicable Laws and Legal Matters
(v) Licences. The Company holds all licenses and permits as may be
requisite for carrying on the Business of the Company in the manner
in which it has heretofore been carried on, which licenses and
permits have been maintained and continue to be in good standing
except where the failure to obtain or maintain such licenses or
permits would not have a material adverse effect on the Company
Business;
(w) Applicable Laws. The Company has not been charged with or received
notice of breach of any laws, ordinances, statutes, regulations,
by-laws, orders or decrees to which it is subject or which apply to
it the violation of which would have a material adverse effect on
the Company, and, to its knowledge, the Company is not in breach of
any laws, ordinances, statutes, regulations, by-laws, orders or
decrees the contravention of which would result in a material
adverse impact on the Business of the Company;
(x) Pending or Threatened Litigation. There is no material litigation or
administrative or governmental proceeding or enquiry pending or
threatened against or relating to the Company, the Business of the
Company, or any of the Company Assets, nor does the Company have any
knowledge of any deliberate act or omission of the Company that
would form any material basis for any such action, proceeding or
enquiry, except as set forth in Schedule "I-A" hereto;
(y) No Bankruptcy. The Company has not made any voluntary assignment or
proposal under applicable laws relating to insolvency and bankruptcy
and no bankruptcy petition has been filed or presented against the
Company and no order has been made or a resolution passed for the
winding-up, dissolution or liquidation of the Company;
(z) Labour Matters. The Company is not party to any collective agreement
relating to the Business of the Company with any labour union or
other association of employees and no part of the Business of the
Company has been certified as a unit appropriate for collective
bargaining or, to the knowledge of the Company, has made any attempt
in that regard and the Company has no reason to believe
<PAGE>
13
that any current employees will leave the Company's employ as a
result of this Merger.Finder's Fees. The Company is not party to any
agreement which provides for the payment of finder's fees, brokerage
fees, commissions or other fees or amounts which are or may become
payable to any third party in connection with the execution and
delivery of this Agreement and the transactions contemplated herein;
Execution and Performance of Agreement
(aa) Authorization and Enforceability. The execution and delivery of this
Agreement, and the completion of the transactions contemplated
hereby, constitute a legal, valid and binding obligation of the
Company and is enforceable against it in accordance with its terms;
(bb) No Violation or Breach. The execution and performance of this
Agreement will not
(i) violate the charter documents of the Company or result in any
breach of, or default under, any loan agreement, mortgage,
deed of trust, or any other agreement to which the Company, is
a party,
(ii) give any person any right to terminate or cancel any agreement
including, without limitation, the Company Material Contracts,
or any right or rights enjoyed by the Company,
(iii) result in any alteration of the Company's obligations under
any agreement to which the Company is party including, without
limitation, the Company Material Contracts,
(iv) result in the creation or imposition of any lien, encumbrance
or restriction of any nature whatsoever in favour of a third
party upon or against the Company Assets,
(v) result in the imposition of any tax liability to the Company
relating to the Company Assets or the Company Shares, or
(vi) violate any court order or decree to which the Company is
subject;
The Company Assets - Ownership and Condition
(cc) Business Assets. The Company Assets comprise all of the property and
assets of the Business of the Company, and neither the Company
Shareholder nor any other person, firm or corporation owns any
assets used by the Company in operating the Business of the Company,
whether under a lease, rental agreement or other arrangement, other
than as disclosed in Schedules "E" or "H" hereto;
(dd) Title. The Company is the legal and beneficial owner of the Company
Assets, free and clear of all mortgages, liens, charges, pledges,
security interests, encumbrances or other claims whatsoever, save
and except as disclosed in Schedules "E" or "H" hereto;
(ee) No Option. No person, firm or corporation has any agreement or
option or a right capable of becoming an agreement for the purchase
of any of the Company Assets;
<PAGE>
14
(ff) Company Insurance Policies. The Company maintains the public
liability insurance and insurance against loss or damage to the
Company Assets and the Business of the Company as described in
Schedule "F" hereto;
(gg) Company Material Contracts. The Company Material Contracts listed in
Schedule "H" constitute all of the material contracts of the
Company;
(hh) No Default. There has not been any default in any material
obligation of the Company or any other party to be performed under
any of the Company Material Contracts, each of which is in good
standing and in full force and effect and unamended, and the Company
is not aware of any default in the obligations of any other party to
any of the Company Material Contracts;
(ii) No Compensation on Termination. There are no agreements, commitments
or understandings relating to severance pay or separation allowances
on termination of employment of any employee of the Company. The
Company is not obliged to pay benefits or share profits with any
employee after termination of employment except as required by law;
The Company Assets - Company Equipment
(jj) Company Equipment. The Company Equipment has been maintained in a
manner consistent with that of a reasonably prudent owner and such
equipment is in good working condition;
The Company Assets - Company Goodwill and Other Assets
(kk) Company Goodwill. The Company carries on the Business of the Company
only under the name "9278 Distributors" and variations thereof and
under no other business or trade names. The Company does not have
any knowledge of any infringement by the Company of any patent,
trademark, copyright or trade secret;
The Business of the Company
(ll) Maintenance of Business. Since the date of the Company Financial
Statements, the Business of the Company has been carried on in the
ordinary course and the Company has not entered into any material
agreement or commitment except in the ordinary course and save and
except as set forth in Schedule "I-B" hereto;
(mm) Subsidiaries. The Company does not own any subsidiary and does not
otherwise own, directly or indirectly, any shares or interest in any
other corporation, partnership, joint venture or firm; and
(nn) Year 2000 Compliance. The Company has taken all necessary steps to
ensure that its computer systems do not contain date-sensitive
software which may recognize a date using "00" as the year 1900
rather than the year 2000 or otherwise cease to function as intended
due to a program fault arising therefrom.
<PAGE>
15
ARTICLE 5
COVENANTS OF THE COMPANY
Covenants
5.1 The Company covenants and agrees with iLink that it will:
(a) Reporting and Internal Controls. From and after the Effective Time,
the Company shall forthwith take all required actions to implement
internal controls on the Business of the Surviving Company to ensure
that the Company complies with Section 13b(2) of the Securities and
Exchange Act of 1934; and
(b) No Option Grants. From the Closing and for a period of six months
thereafter, the Company shall not issue any bonus, shares or rights
to purchase any security to any of the Company Shareholders.
Authorization
5.2 The Company agrees to authorize and direct any and all federal, state,
municipal, foreign and international governments and regulatory authorities
having jurisdiction respecting the Company to release any and all information in
their possession respecting the Company to iLink. The Company shall execute and
deliver to iLink any and all consents to the release of information and specific
authorizations which iLink reasonably require to gain access to any and all such
information.
Survival
5.3 The covenants set forth in this Article shall survive the Closing for the
benefit of iLink.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF ILINK
Representations and Warranties
iLink represents and warrants in all material respects to the Company,
with the intent that the Company will rely thereon in entering into this
Agreement and in approving and completing the transactions contemplated hereby,
that:
iLink - Corporate Status and Capacity
(a) Incorporation. iLink is a corporation duly incorporated and validly
subsisting under the laws of the State of Nevada, and is in good
standing with the office of the Secretary of State for the State of
Nevada;
(b) Carrying on Business. iLink carries on business in the Province of
British Columbia and Alberta only and does not carry on any material
business activity in any other jurisdiction, save and except for the
application for a PCS license filed with the Governments of Trinidad
and Tobago. iLink has offices in Vancouver, British Columbia,
Calgary, Alberta and San Francisco, California and in no other
locations. The nature of the Business of iLink does not require
<PAGE>
16
iLink to register or otherwise be qualified to carry on business in
any other jurisdiction;
(c) Corporate Capacity. iLink has the corporate power, capacity and
authority to own the iLink Assets and to enter into and complete
this Agreement;
(d) Reporting Status; Listing. iLink is required to file current reports
with the Securities and Exchange Commission pursuant to section
15(d) of the Securities Exchange Act of 1934 and iLink Shares are
quoted on the NASD "Bulletin Board";
iLink - Capitalization
(e) Authorized Capital. The authorized capital of iLink consists of
25,000,000 iLink Common Shares, $0.001 par value and 5,000,000
shares of preferred stock. $0.001 par value, of which 5,809,629
iLink Common Shares and no shares of preferred stock are presently
issued and outstanding;
(f) No Option. No person, firm or corporation has any agreement or
option or any right capable of becoming an agreement or option for
the acquisition of iLink Shares or for the purchase, subscription or
issuance of any of the unissued shares in the capital of iLink other
than pursuant to iLink's Non-Qualified Stock Option Plan adopted
June 1, 1999 under which options to acquire 23,000 iLink Shares at a
price of $5.25 per iLink Share have been granted to certain
employees of iLink and pursuant to the Subscription Agreements, the
Century Capital Consulting Agreement, and the Schriber Agreement;
(g) Capacity. iLink has the full right, power and authority to enter
into this Agreement on the terms and conditions contained herein;
iLink - Records and Financial Statements
(h) Charter Documents. The charter documents of iLink have not been
altered since the incorporation of iLink, except as filed in the
record books of iLink;
(i) iLink Financial Statements. The iLink Financial Statements present
fairly, in all material respects, the assets and liabilities
(whether accrued, absolute, contingent or otherwise) of iLink as of
the respective dates thereof, and the sales and earnings of the
Business of iLink during the periods covered thereby, in all
material respects and have been prepared in substantial accordance
with generally accepted accounting principles consistently applied;
(j) iLink Accounts Payable and Liabilities. There are no material
liabilities, contingent or otherwise, of iLink which are not
disclosed in Schedule "L" hereto (provided that, at the Closing,
iLink shall have paid down the Accounts Payable and Liabilities by
not less than $100,000) or reflected in the iLink Financial
Statements except those incurred in the ordinary course of business
since the date of the said schedule and the Quarterly iLink
Financial Statements, and iLink has not guaranteed or agreed to
guarantee any debt, liability or other obligation of any person,
firm or corporation. Without limiting the generality of the
foregoing, all accounts payable and liabilities of iLink are
described in Schedule "L" hereto;
(k) iLink Accounts Receivable. All the iLink Accounts Receivable result
from bona fide business transactions and services actually rendered
without, to the
<PAGE>
17
knowledge and belief of iLink, any claim by the obligor for set-off
or counterclaim;
(l) iLink Bank Accounts. All of the iLink Bank Accounts, their location,
numbers and the authorized signatories thereto are as set forth in
Schedule "N" hereto;
(m) No Debt to Related Parties. iLink is not, and on Closing will not
be, materially indebted to any director or officer or affiliate of
iLink, or any family member thereof;
(n) No Related Party Debt to iLink. No director or officer or affiliate
of iLink is now indebted to or under any financial obligation to
iLink on any account whatsoever, except for advances on account of
travel and other expenses not exceeding $5,000 in total;
(o) No Dividends. No dividends or other distributions on any shares in
the capital of iLink have been made, declared or authorized since
the date of Quarterly iLink Financial Statements;
(p) No Payments. No payments of any kind have been made or authorized
since the date of Quarterly iLink Financial Statements to or on
behalf of officers, directors, shareholders or employees of iLink or
under any management agreements with iLink except payments made in
the ordinary course of business and at the regular rates of salary
or other remuneration payable to them;
(q) No Pension Plans. There are no pension, profit sharing, group
insurance or similar plans or other deferred compensation plans
affecting iLink;
(r) No Adverse Events. Since the date of the Quarterly iLink Financial
Statements
(i) there has not been any material adverse change in the
financial position or condition of iLink, its liabilities or
the iLink Assets or any damage, loss or other change in
circumstances materially affecting iLink, the Business of
iLink or the iLink Assets or iLink's right to carry on the
Business of iLink, other than changes in the ordinary course
of business,
(ii) there has not been any damage, destruction, loss or other
event (whether or not covered by insurance) materially and
adversely affecting iLink, the Business of iLink or the iLink
Assets,
(iii) there has not been any material increase in the compensation
payable or to become payable by iLink to any of iLink's
officers, employees or agents or any bonus, payment or
arrangement made to or with any of them,
(iv) the Business of iLink has been and continues to be carried on
in the ordinary course,
(v) iLink has not waived or surrendered any right of material
value,
(vi) iLink has not discharged or satisfied or paid any lien or
encumbrance or obligation or liability other than current
liabilities in the ordinary course of business, and
<PAGE>
18
(vii) no capital expenditures in excess of $10,000 individually or
$30,000 in total have been authorized or made;
iLink - Income Tax Matters
(s) Tax Returns. All tax returns and reports of iLink required by law to
be filed have been filed and are true, complete and correct, and any
taxes payable in accordance with any return filed by the Company or
in accordance with any notice of assessment or reassessment issued
by any taxing authority have been so paid;
(t) Current Taxes. Adequate provisions have been made for taxes payable
for the current period for which tax returns are not yet required to
be filed and there are no agreements, waivers, or other arrangements
providing for an extension of time with respect to the filing of any
tax return by, or payment of, any tax, governmental charge or
deficiency by iLink. iLink is not aware of any contingent tax
liabilities or any grounds which would prompt a reassessment
including aggressive treatment of income and expenses in filing
earlier tax returns;
iLink - Applicable Laws and Legal Matters
(u) Licences. iLink holds all licenses and permits as may be requisite
for carrying on the Business of iLink in the manner in which it has
heretofore been carried on, which licenses and permits have been
maintained and continue to be in good standing except where the
failure to obtain or maintain such licenses or permits would not
have a material adverse effect on the Company Business;
(v) Applicable Laws. iLink has not been charged with or received notice
of breach of any laws, ordinances, statutes, regulations, by-laws,
orders or decrees to which it is subject or which apply to it the
violation of which would have a material adverse effect on the
Business of iLink;
(w) Pending or Threatened Litigation. There is no material litigation or
administrative or governmental proceeding or enquiry pending or
threatened against or relating to iLink, the Business of iLink, or
any of the iLink Assets nor does iLink have any knowledge of any
deliberate act or omission of iLink that would form any material
basis for any such action, proceeding or enquiry;
(x) No Bankruptcy. iLink has not made any voluntary assignment or
proposal under applicable laws relating to insolvency and bankruptcy
and no bankruptcy petition has been filed or presented against iLink
and no order has been made or a resolution passed for the
winding-up, dissolution or liquidation of iLink;
(y) Labour Matters. iLink is not party to any collective agreement
relating to the Business of iLink with any labour union or other
association of employees and no part of the Business of iLink has
been certified as a unit appropriate for collective bargaining or,
to the knowledge of iLink, has made any attempt in that regard;
(z) Finder's Fees. iLink is not party to any agreement which provides
for the payment of finder's fees, brokerage fees, commissions or
other fees or amounts which are or may become payable to any third
party in connection with the
<PAGE>
19
execution and delivery of this Agreement and the transactions
contemplated herein, save and except pursuant to the Century Capital
Consulting Agreement;
Execution and Performance of Agreement
(aa) Authorization and Enforceability. The execution and delivery of this
Agreement, and the completion of the transactions contemplated
hereby, have been duly and validly authorized by all necessary
corporate action on the part of iLink and this Agreement constitutes
a legal, valid and binding obligation of iLink and is enforceable
against it in accordance with its terms;
(bb) No Violation or Breach. The execution and performance of this
Agreement will not
(i) violate the charter documents of iLink or result in any breach
of, or default under, any loan agreement, mortgage, deed of
trust, or any other agreement to which iLink is a party,
(ii) give any person any right to terminate or cancel any agreement
including, without limitation, the iLink Material Contracts,
or any right or rights enjoyed by iLink other than pursuant to
iLink's agreement with Telus,
(iii) result in any alteration of iLink's obligations under any
agreement to which iLink is party including, without
limitation, the iLink Material Contracts,
(iv) result in the creation or imposition of any lien, encumbrance
or restriction of any nature whatsoever in favour of a third
party upon or against the iLink Assets,
(v) result in the imposition of any tax liability to iLink
relating to the iLink Assets, or
(vi) violate any court order or decree to which iLink is subject;
The iLink Assets - Ownership and Condition
(cc) Business Assets. The iLink Assets comprise all of the property and
assets of the Business of iLink, and no other person, firm or
corporation owns any assets used by iLink in operating the Business
of iLink, whether under a lease, rental agreement or other
arrangement, other than as disclosed in Schedules "O" or "Q" hereto;
(dd) Title. iLink is the legal and beneficial owner of the iLink Assets,
free and clear of all mortgages, liens, charges, pledges, security
interests, encumbrances or other claims whatsoever, save and except
as disclosed in Schedules "O" or "Q" hereto;
(ee) No Option. No person, firm or corporation has any agreement or
option or a right capable of becoming an agreement for the purchase
of any of the iLink Assets;
(ff) iLink Insurance Policies. iLink maintains the public liability
insurance and insurance against loss or damage to the iLink Assets
and the Business of iLink as described in Schedule "P" hereto;
<PAGE>
20
(gg) iLink Material Contracts. The iLink Material Contracts listed in
Schedule "Q" constitute all of the material contracts of iLink;
(hh) No Default. There has not been any default in any material
obligation of iLink or any other party to be performed under any of
the iLink Material Contracts, each of which is in good standing and
in full force and effect and unamended, and iLink is not aware of
any default in the obligations of any other party to any of the
iLink Material Contracts;
(ii) No Compensation on Termination. There are no agreements, commitments
or understandings relating to severance pay or separation allowances
on termination of employment of any employee of iLink. iLink is not
obliged to pay benefits or share profits with any employee after
termination of employment except as required by law;
iLink Assets - iLink Equipment
(jj) iLink Equipment. The iLink Equipment has been maintained in a manner
consistent with that of a reasonably prudent owner;
iLink Assets - iLink Goodwill and Other Assets
(kk) iLink Goodwill. iLink carries on the Business of iLink only under
the name "iLink" and variations thereof and under no other business
or trade names. iLink does not have any knowledge of infringement of
any patent, trademarks, copyright or trade secret except as set
forth in Schedule"Q-A" hereto.
The Business of iLink
(ll) Maintenance of Business. Since the date of the iLink Financial
Statements, the Business of iLink has been carried on in the
ordinary course and iLink has not entered into any material
agreement or commitment except in the ordinary course and except as
disclosed herein;
(mm) Subsidiaries. iLink does not own any subsidiaries other than iLink
Telecom (B.C.) Inc. and iLink Telecom (BVI) Inc. and does not
otherwise own, directly or indirectly, any shares or interest in any
other corporation, partnership, joint venture or firm, save and
except for iLink Telecom (BVI) Inc.'s 49% interest in iLink Trinidad
and Tobago Telecom Inc.;
(nn) Year 2000 Compliance. ILink has taken all necessary steps to ensure
that its computer systems do not contain date-sensitive software
which may recognize a date using "00" as the year 1900 rather than
the year 2000 or otherwise cease to function as intended due a
program fault arising therefrom; and
iLink - Acquisition Shares
(oo) Acquisition Shares. The Acquisition Shares when delivered to the
Company shareholders shall be validly issued and outstanding as
fully paid and non-assessable shares and the Acquisition Shares
shall be transferable upon the books of iLink, in all cases subject
to the provisions and restrictions of all applicable securities
laws.
<PAGE>
21
ARTICLE 7
COVENANTS OF ILINK
Covenants
7.1 iLink covenants and agrees with the Company that it will:
(a) Reporting and Internal Controls. From and after the Effective Date
iLink shall forthwith take all required actions to implement
internal controls on the Business of the Company to ensure that
iLink complies with Section 13b(2) of the Exchange Act; and
(b) No Option Grants. From the Closing and for a period of six months
thereafter, iLink shall not issue any rights to purchase any
security at the Closing including with limiting the generality of
the foregoing compensatory stock options, to any of the Company
Shareholders.
Authorization
7.2 iLink agrees to authorize and direct any and all federal, state, municipal,
foreign and international governments and regulatory authorities having
jurisdiction respecting iLink to release any and all information in their
possession respecting iLink to the Company. iLink shall promptly execute and
deliver to the Company any and all consents to the release of information and
specific authorizations which the Company reasonably require to gain access to
any and all such information.
Survival
7.3 The covenants set forth in this Article shall survive the Closing for the
benefit of the Company.
ARTICLE 8
EMPLOYMENT AGREEMENT
At the Closing, iLink and the Company shall enter into the Employment
Agreement with Sajid Kapadia pursuant to which he will provide services to iLink
and the Company. The Employment Agreement shall be substantially in the form
attached hereto as Schedule "R".
ARTICLE 9
CONDITIONS PRECEDENT
Conditions Precedent in favour of iLink
9.1 iLink's obligations to carry out the transactions contemplated hereby are
subject to the fulfillment of each of the following conditions precedent on or
before the Closing:
(a) all documents or copies of documents required to be executed
and delivered to iLink hereunder will have been so executed
and delivered;
<PAGE>
22
(b) all of the terms, covenants and conditions of this Agreement
to be complied with or performed by the Company at or prior to
the Closing will have been complied with or performed;
(c) title to the Company Shares and Company Assets will be free
and clear of all mortgages, liens, charges, pledges, security
interests, encumbrances or other claims whatsoever, save and
except as disclosed herein;
(d) the Certificate of Merger shall be executed by the Company;
(e) subject to Article 10 hereof, there will not have occurred
(i) any material adverse change in the financial position or
condition of the Company, its liabilities or the Company
Assets or any damage, loss or other change in
circumstances materially and adversely affecting the
Business of the Company or the Company Assets or the
Company's right to carry on the Business of the Company,
other than changes in the ordinary course of business,
none of which has been materially adverse, or
(ii) any damage, destruction, loss or other event, including
changes to any laws or statutes applicable to the
Company or the Business of the Company (whether or not
covered by insurance) materially and adversely affecting
the Company, the Business of the Company or the Company
Assets;
(f) the Escrow Agent (as that term is defined in the Subscription
Agreements) shall have received duly executed Subscription
Agreements for subscriptions pursuant to the Private
Placement, in the aggregate, of not less than $2,500,000,
shall have in its trust account not less than $2,500,000 and
shall have provided evidence thereof to iLink;
(g) iLink's issued and outstanding common share capital shall be
reduced to 4,059,629 iLink Shares by the return to treasury of
1,750,000 iLink Shares and iLink shall have received releases
in form satisfactory to the Company from the persons returning
the 1,750,000 iLink Shares; and
(h) the transactions contemplated hereby shall have been approved
by all other regulatory authorities having jurisdiction over
the subject matter hereof, if any.
Waiver by iLink
9.2 The conditions precedent set out in the preceding section are inserted for
the exclusive benefit of iLink and any such condition may be waived in whole or
in part by iLink at or prior to Closing by delivering to the Company a written
waiver to that effect signed by iLink. In the event that the conditions
precedent set out in the preceding section are not satisfied on or before the
Closing iLink shall be released from all obligations under this Agreement.
Conditions Precedent in Favour of the Company
9.3 The obligation of the Company to carry out the transactions contemplated
hereby is subject to the fulfillment of each of the following conditions
precedent on or before the Closing:
<PAGE>
23
(a) all documents or copies of documents required to be executed and
delivered to the Company hereunder will have been so executed and
delivered;
(b) all of the terms, covenants and conditions of this Agreement to be
complied with or performed by iLink at or prior to the Closing will
have been complied with or performed;
(c) iLink will have delivered the Acquisition Shares to the Company
Shareholders at the Closing in accordance with Schedule "U" attached
hereto and the Acquisition Shares will be registered on the books of
iLink in the name of the Company Shareholders at Effective Time;
(d) title to the Acquisition Shares will be free and clear of all
mortgages, liens, charges, pledges, security interests, encumbrances
or other claims whatsoever;
(e) the Certificate of Merger shall be executed by the Acquirer in form
acceptable for filing with the New York Secretary of State.;
(f) subject to Article 10 hereof, there will not have occurred
(i) any material adverse change in the financial position or
condition of iLink, its liabilities or iLink Assets or any
damage, loss or other change in circumstances materially and
adversely affecting iLink, the Business of iLink or iLink
Assets or iLink's right to carry on the Business of iLink,
other than changes in the ordinary course of business, none of
which has been materially adverse, or
(ii) any damage, destruction, loss or other event, including
changes to any laws or statutes applicable to iLink or the
Business of iLink (whether or not covered by insurance)
materially and adversely affecting iLink, the Business of
iLink or iLink Assets;
(g) the Escrow Agent (as that term is defined in the Subscription
Agreements) shall have received duly executed Subscription
Agreements for subscriptions pursuant to the Private Placement, in
the aggregate, of not less than $2,500,000, shall have in its trust
account not less than $2,500,000 and shall have provided evidence
thereof to the Company;
(h) iLink's issued and outstanding common share capital shall be reduced
to 4,059,629 iLink Shares by the return to treasury of 1,750,000
iLink Shares and iLink shall have received releases in form
satisfactory to the Company from the persons returning the 1,750,000
iLink Shares; and
(i) the transactions contemplated hereby shall have been approved by all
other regulatory authorities having jurisdiction over the subject
matter hereof, if any.
Waiver by Company
9.4 The conditions precedent set out in the preceding section are inserted for
the exclusive benefit of the Company and any such condition may be waived in
whole or in part by the Company at or prior to the Closing by delivering to
iLink a written waiver to that effect signed by the Company. In the event that
the conditions precedent set out in the preceding section are not satisfied on
or before the Closing the Company shall be released from all obligations under
this Agreement.
<PAGE>
24
Nature of Conditions Precedent
9.5 The conditions precedent set forth in this Article are conditions of
completion of the transactions contemplated by this Agreement and are not
conditions precedent to the existence of a binding agreement. Each party
acknowledges receipt of the sum of $1.00 and other good and valuable
consideration as separate and distinct consideration for agreeing to the
conditions of precedent in favour of the other party or parties set forth in
this Article.
Termination
9.6 Notwithstanding any provision herein to the contrary, if the Closing does
not occur on or before December , 1999, this Agreement will be at an end and
will have no further force or effect, unless otherwise agreed upon by the
parties in writing.
Confidentiality
9.7 Notwithstanding any provision herein to the contrary, the parties hereto
agree that the existence and terms of this Agreement are confidential and that
if this Agreement is terminated pursuant to the preceding section the parties
agree to return to one another any and all financial, technical and business
documents delivered to the other party or parties in connection with the
negotiation and execution of this Agreement and shall keep the terms of this
Agreement and all information and documents received from the Company and iLink
and the contents thereof confidential and not utilize nor reveal or release
same, provided, however, that iLink will be required to issue one or more news
releases and file a Current Report on Form 8-K with the Securities and Exchange
Commission respecting the proposed Merger contemplated hereby together with such
other documents as are required to maintain the currency of iLink's filings with
the Securities and Exchange Commission.
ARTICLE 10
RISK
Material Change in the Business of the Company
10.1 If any material loss or damage to the Business of the Company occurs prior
to Closing and such loss or damage, in iLink's reasonable opinion, cannot be
substantially repaired or replaced within sixty (60) days, iLink shall, within
seven (7) days following any such loss or damage, by notice in writing to the
Company, at its option, either:
(a) terminate this Agreement, in which case no party will be under any
further obligation to any other party; or
(b) elect to complete the Merger and the other transactions contemplated
hereby, in which case the proceeds and the rights to receive the
proceeds of all insurance covering such loss or damage will, as a
condition precedent to iLink's obligations to carry out the
transactions contemplated hereby, be vested in the Company or
otherwise adequately secured to the satisfaction of iLink on or
before the Closing Date.
Material Change in the Business of iLink
10.2 If any material loss or damage to the Business of iLink occurs prior to
Closing and such loss or damage, in the Company's reasonable opinion, cannot be
substantially repaired or
<PAGE>
25
replaced within sixty (60) days, the Company shall, within seven (7) days
following any such loss or damage, by notice in writing to iLink, at its option,
either:
(a) terminate this Agreement, in which case no party will be under any
further obligation to any other party; or
(b) elect to complete the Merger and the other transactions contemplated
hereby, in which case the proceeds and the rights to receive the
proceeds of all insurance covering such loss or damage will, as a
condition precedent to the Company's obligations to carry out the
transactions contemplated hereby, be vested in iLink or otherwise
adequately secured to the satisfaction of the Company on or before
the Closing Date.
ARTICLE 11
CLOSING
Closing
11.1 The Merger and the other transactions contemplated by this Agreement will
be closed at the Place of Closing in accordance with the closing procedure set
out in this Article.
Documents to be Delivered by the Company
11.2 On or before the Closing, the Company will deliver or cause to be delivered
to iLink:
(a) the original or certified copies of the charter documents of the
Company and all corporate records documents and instruments of the
Company, the corporate seals of the Company and all books and
accounts of the Company;
(b) certificates representing the Company Shares, duly endorsed in blank
in accordance with Schedule "U" attached hereto;
(c) all reasonable consents or approvals required to be obtained by the
Company and the Company for the purposes of completing the Merger
and preserving and maintaining the interests of the Company under
any and all Company Material Contracts and in relation to the
Company Assets;
(d) certified copies of such resolutions of the shareholder and director
of the Company as are required to be passed to authorize the
execution, delivery and implementation of this Agreement;
(e) an acknowledgement from the Company of the satisfaction of the
conditions precedent set forth in section 9.3 hereof;
(f) the Employment Agreement, duly executed by the Company and the Sajid
Kapadia ;
(g) the Certificate, duly executed by the Company ; and
(h) such other documents as iLink may reasonably require to give effect
to the terms and intention of this Agreement.
<PAGE>
26
Documents to be Delivered by iLink
11.3 On or before the Closing, iLink shall deliver or cause to be delivered to
the Company:
(a) wire transfer of the Cash Acquisition Price to the trust account of
the attorneys for the Company Shareholders to be disbursed in
accordance with Schedule "U" hereto;
(b) the Promissory Note, duly executed by iLink to be disbursed in
accordance with Schedule "U" hereto;
(c) share certificates representing the Acquisition Shares duly
registered in the names of the Company Shareholders required in
accordance with Schedule "U" hereto;
(d) certified copies of such resolutions of the directors of iLink as
are required to be passed to authorize the execution, delivery and
implementation of this Agreement;
(e) an acknowledgement from iLink of the satisfaction of the conditions
precedent set forth in section 9.1 hereof;
(f) copies of the Subscription Agreements duly executed by the
subscribers to the Private Placement together with evidence that the
Escrow Agent (as that term is defined in the Subscription
Agreements) has received into its trust account not less than
$2,500,000 pursuant to the Subscription Agreements;
(g) the Employment Agreement, duly executed by iLink;
(h) the Certificate of Merger, duly executed by the Company; and
(i) such other documents as the Company may reasonably require to give
effect to the terms and intention of this Agreement.
(j) The Guaranty of the Acquirer in the form set forth in Schedule V.
ARTICLE 11A
POST-CLOSING MATTERS
Forthwith after the Closing, iLink and the Company agree to use all its
best efforts to:
(a) file the Certificate of Merger with Secretary of State of the
State of New York;
(b) iLink shall accept the resignation of Peter Schirber, and
Sajid Kapadia and Haris Syed shall be appointed directors of
iLink;
(c) ILink and the Company acknowledge that the acquisition of the
Company by iLink, and iLink and the Company agree that the
value of iLink shall be determined by an independent valuation
of iLink to be prepared by a duly qualified business valuator
forthwith after the Closing Date with due regard to lack of
liquidity of the trading market of the iLink Common Shares and
the value of iLink's net assets on the Closing Date;
<PAGE>
27
(d) file Form D with the Securities and Exchange Commission; and
(e) file Form 8-K with the Securities and Exchange Commission.
ARTICLE 12
GENERAL PROVISIONS
Arbitration
12.1 The parties hereto shall attempt to resolve any dispute, controversy,
difference or claim arising out of or relating to this Agreement by negotiation
in good faith. If such good faith negotiation fails to resolve such dispute,
controversy, difference or claim within fifteen (15) days after any party
delivers to any other party a notice of its intent to submit such matter to
arbitration, then any party to such dispute, controversy, difference or claim
may submit such matter to arbitration in the City of New York. The arbitration
panel shall consist of a single arbitrator selected by the joint agreement of
the parties to the dispute; provided that if the parties cannot agree upon the
identity of a single arbitrator within fifteen (15) days, then the arbitration
panel shall consist of three (3) arbitrators, one (1) of whom shall be appointed
by each party within ten (10) days and the third duly appointed by mutual
agreement of the two (2) arbitrators so appointed by the parties; provided
further that if the two arbitrators cannot select the third arbitrator within
ten (10) days after their appointment, the selection of the third arbitrator
shall be made in accordance with the general rules of arbitration in relation to
arbitrations in the State of New York (the "Rules"). If no such arbitrator is
appointed within ten (10) days of such request, either party may apply to a
court having jurisdiction to make such appointment. Once the arbitration panel
has been selected, the arbitration of the dispute shall be conducted in English
in accordance with the Rules in the State of New York, unless otherwise provided
or limited by the Rules. The arbitrator(s) shall give each of the parties a fair
opportunity to prepare, including pre-arbitration hearing discoveries, and
present its position with respect to the dispute, and each party shall be
entitled to call witnesses to testify, examine and cross-examine witnesses that
the other party calls to testify, introduce documents and other materials and
submit written statements of position and arguments. The arbitration panel shall
make a final determination, to be provided in writing to each party, that
resolves the dispute and includes an allocation of the aggregate fees, costs and
expenses of the arbitration between the parties to the dispute, such allocation
to be made in the sole discretion of the arbitration panel after giving due
consideration to the relative merits of the parties positions in the dispute.
All results of the arbitration proceedings shall be final, conclusive and
binding on all parties to this Agreement, and shall not be subject to judicial
review. Judgment upon the award rendered by the arbitrator may be entered in the
State of New York or any other court having competent jurisdiction.
Notice
12.2 Any notice required or permitted to be given by any party will be deemed to
be given when in writing and delivered to the address for notice of the intended
recipient by personal delivery, prepaid single certified or registered mail, or
telecopier. Any notice delivered by mail shall be deemed to have been received
on the fourth business day after and excluding the date of mailing, except in
the event of a disruption in regular postal service in which event such notice
shall be deemed to be delivered on the actual date of receipt. Any notice
delivered personally or by telecopier shall be deemed to have been received on
the actual date of delivery.
Addresses for Service
12.3 The address for service of notice of each of the parties hereto is as
follows:
<PAGE>
28
(a) iLink or the Acquirer:
iLink Telecom Inc.
666 Burrard Street, Suite 1170
Vancouver, British Columbia
V6C 2X8
Telecopier: (604) 717-1109
Copy to:
Roger Linn
Bartel Eng Linn & Schroder
300 Capital Mall, Suite 1100
Sacramento, California 95814
Telecopier: (916) 442-3442
(b) the Company:
9278 Distributor Inc.
1942 Williamsbridge Road
Bronx, New York 10461
Telecopier: (718) 792-5130
Copy to:
Craig S. Libson
Parker Duryee Rosoff & Haft
529 Fifth Avenue
New York, New York 10017
Telecopier: (212) 972-9487
Change of Address
12.4 Any party may, by notice to the other parties change its address for notice
to some other address in North America and will so change its address for notice
whenever the existing address or notice ceases to be adequate for delivery by
hand. A post office box may not be used as an address for service.
Further Assurances
12.5 Each of the parties will execute and deliver such further and other
documents and do and perform such further and other acts as any other party may
reasonably require to carry out and give effect to the terms and intention of
this Agreement.
Time of the Essence
12.6 Time is expressly declared to be the essence of this Agreement.
<PAGE>
29
Entire Agreement
12.7 The provisions contained herein constitute the entire agreement among the
Company and iLink respecting the subject matter hereof and supersede all
previous communications, representations and agreements, whether verbal or
written, among the Company and iLink with respect to the subject matter hereof.
Enurement
12.8 This Agreement will enure to the benefit of and be binding upon the parties
hereto and their respective heirs, executors, administrators, successors and
permitted assigns.
Assignment
12.9 This Agreement is not assignable without the prior written consent of the
parties hereto.
Counterparts
12.10 This Agreement may be executed in counterparts, each of which when
executed by any party will be deemed to be an original and all of which
counterparts will together constitute one and the same Agreement. Delivery of
executed copies of this Agreement by telecopier will constitute proper delivery,
provided that originally executed counterparts are delivered to the parties
within a reasonable time thereafter.
Applicable Law
12.11 This Agreement is subject to the laws of the State of New York.
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<PAGE>
30
IN WITNESS WHEREOF the parties have executed this Agreement effective as of the
day and year first above written.
ILINK TELECOM INC.
By: /s/ Amar Bahadoorsingh
- ------------------------------ ---------------------------
Witness Authorized Signatory
- ------------------------------
Name
- ------------------------------
Address
- ------------------------------
9278 DISTRIBUTOR
ACQUISITION CORPORATION
By /s/ Amar Bahadoorsingh
- ------------------------------ ---------------------------
Witness Authorized Signatory
- ------------------------------
Name
- ------------------------------
Address
- ------------------------------
9278 DISTRIBUTOR INC.
By: /s/ Sajid Kapadia
- ------------------------------ ---------------------------
Witness Authorized Signatory
- ------------------------------
Name
- ------------------------------
Address
- ------------------------------
This is Page 30 to the Agreement and Plan of Merger dated December 10, 1999
among iLink Telecom, Inc., 9278 Distributor Acquisition Corporation and 9278
Distributor Inc.
<PAGE>
CERTIFICATE OF DESIGNATION
Amar Bahadoorsingh certifies that he is the President and Secretary of iLink
Telecom, Inc., a Nevada corporation (hereinafter referred to as the "Company")
and that, pursuant to the Company's Certificate of Incorporation, as amended,
and Section 78.1955 of the Nevada Revised Statutes, the Board of Directors of
the Company adopted the following resolutions on December 10, 1999 and that none
of the shares of Series B Convertible Preferred Stock referred to in this
Certificate of Designation have been issued.
- --------------------------------------------------------------------------------
Creation of Series B Convertible Preferred Stock
1. There is hereby created a series of preferred stock consisting of 2,500
shares and designated as the Series B Convertible Preferred Stock ( "Preferred
Stock"), having the voting powers, preferences, relative, participating,
limitations, qualifications, optional and other special rights and the
qualifications, limitations and restrictions thereof that are set forth below.
Conversion Provisions
2. The holders of Preferred Stock shall have conversion rights as follows (the
"Conversion Rights"):
Conversion
(a) Right to Convert. From and after the third (3rd) business day
following the day on which the Company receives payment in full for
Preferred Stock from and issues Preferred Stock to a particular
holder of Preferred Stock (the "Issuance Date"), all Preferred Stock
held by that holder shall be convertible at the option of the holder
into such number of shares of common stock of the Company ("Common
Stock") as is calculated by the Conversion Rate (as hereinafter
defined). The Conversion Rate, subject to the exceptions defined in
paragraphs 2(b) and (c) hereof, shall be that number of shares of
Common Stock equal to $1,000 divided by seventy five per cent (75%)
of the average Market Price (as hereinafter defined) of the shares
of Common Stock for the ten trading days immediately prior to the
Conversion Date (as hereinafter defined).
(b) Early Conversion Exception. From and after the third (3rd) business
day following the Issuance Date and until the date which is
forty-five (45) calendar days following the Issuance Date a
particular holder of Preferred Stock may elect, as an alternative to
the Conversion Rate defined in paragraph 2(a) hereof, to convert
some or all of the shares of Preferred Stock held by that holder
into such number of shares of Common Stock as is calculated by the
Early Conversion Rate (as hereinafter defined). The Early Conversion
Rate shall be that number of shares of Common Stock equal to $1,000
divided by seventy five per cent (75%) of the Market Price of the
shares of Common Stock on the day immediately preceding the Issuance
Date.
(c) Failure to Register Exemption. In the event that a registration
statement in respect of the Common Stock to be issued upon the
conversion of the Preferred Stock has not been filed with and
declared effective by the Securities and Exchange Commission on or
before the date which is
<PAGE>
2
twelve months following the Issuance Date (the "Anniversary Date"),
the number of shares of Common Stock issued to a particular holder
will be calculated by the Failure to Register Conversion Rate. The
Failure to Register Conversion Rate shall be that number of shares
of Common Stock equal to $1,000 divided by fifty per cent (50%) of
the Market Price of the shares of Common Stock on the day
immediately preceding the Anniversary Date
(d) Market Price. Market Price for a particular date shall be the
closing bid price of the shares of Common Stock on such date, as
reported by the National Association of Securities Dealers Automated
Quotation System (`NASDAQ"), or the closing bid price in the
over-the-counter market if other than NASDAQ.
(e) No Fractional Shares. No fractional shares of Common Stock shall be
issued upon conversion of the Preferred Stock, and in lieu thereof
the number of shares of Common Stock to be issued for each share of
Preferred Stock converted shall be rounded down to the nearest whole
number of shares of Common Stock. Such number of whole shares of
Common Stock to be issued upon the conversion of one share of
Preferred Stock shall be multiplied by the number of shares of
Preferred Stock submitted for conversion pursuant to the Notice of
Conversion (defined below) to determine the total number of shares
of Common Stock to be issued in connection with any one particular
conversion.
(f) Method of Conversion. In order to convert Preferred Stock into
shares of Common Stock, a holder of Preferred Stock shall
(A) complete, execute and deliver to the Company and the Company's
Transfer Agent, Liberty Transfer Co. (the "Transfer Agent")
the conversion certificate attached hereto as Exhibit A (the
"Notice of Conversion"), and
(B) surrender the certificate or certificates representing the
Preferred Stock being converted (the "Converted Certificate")
to the Transfer Agent.
Subject to paragraph 2(i) hereof, the Notice of Conversion shall be
effective and in full force and effect for a particular date if
delivered to the Company and the Transfer Agent on that particular
date prior to 5:00 pm, pacific time, by facsimile transmission or
otherwise, provided that particular date is a business day, and
provided that the original Notice of Conversion and the Converted
Certificate are delivered to and received by the Transfer Agent
within three (3) business days thereafter at 191 New York Avenue,
Huntington, New York 11743-2711 (facsimile: 516-385-1619) and that
particular date shall be referred to herein as the "Conversion
Date". The person or persons entitled to receive the shares of
Common Stock to be issued upon conversion shall be treated for all
purposes as the record holder or holders of such shares of Common
Stock as of the Conversion Date. If the original Notice of
Conversion and the Converted Certificate are not delivered to and
received by the Transfer Agent within three (3) business days
following the Conversion Date, the Notice of Conversion shall become
null and void as if it were never given and the Company shall,
within two (2) business days thereafter, instruct
<PAGE>
3
the Transfer Agent to return to the holder by overnight courier any
Converted Certificate that may have been submitted in connection
with any such conversion. In the event that any Converted
Certificate submitted represents a number of shares of Preferred
Stock that is greater than the number of such shares that is being
converted pursuant to the Notice of Conversion delivered in
connection therewith, the Transfer Agent shall advise the Company to
deliver a certificate representing the remaining number of shares of
Preferred Stock not converted.
(g) Absolute Obligation to issue Common Stock. Upon receipt of a Notice
of Conversion, the Company shall absolutely and unconditionally be
obligated to cause a certificate or certificates representing the
number of shares of Common Stock to which a converting holder of
Preferred Stock shall be entitled as provided herein, which shares
shall constitute fully paid and non-assessable shares of Common
Stock and shall be issued to, delivered by overnight courier to, and
received by such holder by the sixth (6th) business day following
the Conversion Date. Such delivery shall be made at such address as
such holder may designate therefor in its Notice of Conversion or in
its written instructions submitted together therewith.
(h) Minimum Conversion. No less than 50 shares of Preferred Stock may be
converted at any one time by a particular holder, unless the holder
then holds less than 50 shares and converts all such shares held by
it at that time.
(i) Deemed Conversion. Notwithstanding any other provision herein, and
provided that a registration statement in respect of the Common
Stock to be issued upon the conversion of the Preferred Stock has
been filed with and declared effective by the Securities and
Exchange Commission on or before the Anniversary Date, all of the
Preferred Stock outstanding on Anniversary Date shall be deemed to
convert into shares of Common Stock as is calculated by the
Conversion Rate as defined in paragraph 2(a) hereof, provided that,
in the event that this paragraph would result in a particular holder
of Preferred Stock holding, together with the shares of Common Stock
then held by that holder, more than 9.9% of the Company's then
issued and outstanding Common Stock, the conversion deemed hereby
shall be postponed until such time as the particular holder holds
such number of shares of Common Stock that, together with the shares
of Common Stock then held by that holder, would constitute less than
9.9% of the Company's then issued and outstanding Common Stock . The
onus for notifying the Company of the application of this
qualification shall be upon the particular holder.
Adjustments to Conversion Rate
(j) Reclassification, Exchange and Substitution. If the Common Stock to
be issued on conversion of the Preferred Stock shall be changed into
the same or a different number of shares of any other class or
classes of stock, whether by capital reorganization,
reclassification, reverse stock split or forward stock split or
stock dividend or otherwise (other than a subdivision or combination
of shares provided for above), the holders of the Preferred Stock
shall, upon its conversion be entitled to receive, in lieu of the
Common Stock which the holders would have become entitled to receive
but for such change, a number of shares of such other class or
<PAGE>
4
classes of stock that would have been subject to receipt by the
holders if they had exercised their rights of conversion of the
Preferred Stock immediately before that change.
(k) Reorganizations, Mergers, Consolidations or Sale of Assets. If at
any time there shall be a capital reorganization of the Company's
common stock (other than a subdivision, combination,
reclassification or exchange of shares provided for elsewhere in
this Section 2) or merger of the Company into another corporation,
or the sale of the Company's properties and assets as, or
substantially as, an entirety to any other person, then, as a part
of such reorganization, merger or sale, lawful provision shall be
made so that the holders of the Preferred Stock receive the number
of shares of stock or other securities or property of the Company,
or of the successor corporation resulting from such merger, to which
holders of the Common Stock deliverable upon conversion of the
Preferred Stock would have been entitled on such capital
reorganization, merger or sale if the Preferred Stock had been
converted immediately before that capital reorganization, merger or
sale to the end that the provisions of this paragraph 2(k)
(including adjustment of the Conversion Rate then in effect and the
number of shares purchasable upon conversion of the Preferred Stock)
shall be applicable after that event as nearly equivalently as may
be practicable.
(l) No Impairment. The Company will not, by amendment of its Articles of
Incorporation or through any reorganization, recapitalization,
transfer of assets, merger, dissolution, or any other voluntary
action, avoid or seek to avoid the observance or performance of any
of the terms to be observed or performed hereunder by the Company,
but will at all times in good faith assist in the carrying out of
all the provisions of this Section 2 and in the taking of all such
action as may be necessary or appropriate in order to protect the
Conversion Rights of the holders of the Preferred Stock against
impairment.
(m) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Rate for any shares of
Preferred Stock pursuant to paragraphs 2(j) or (k) hereof, the
Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and
furnish to each holder of Preferred Stock effected thereby a
certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or
readjustment is based. The Company shall, upon the written request
at any time of any holder of Preferred Stock, furnish or cause to be
furnished to such holder a like certificate setting forth: (i) such
adjustments and readjustments; (ii) the Conversion Rate at the time
in effect; and (iii) the number of shares of Common Stock and the
amount, if any, of other property which at the time would be
received upon the conversion of such holder's shares of Preferred
Stock.
Liquidation Provisions
3. In the event of any liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, holders of Preferred Stock shall be entitled
to receive an amount equal to $1,000.00 per share, plus any accrued and unpaid
dividends. After the full preferential liquidation amount has been paid to, or
determined and set apart for the
<PAGE>
5
Preferred Stock and all other series of preferred stock hereafter authorized and
issued, if any, the remaining assets of the Company available for distribution
to shareholders shall be distributed ratably to the holders of the Common Stock.
In the event the assets of the Company available for distribution to its
shareholders are insufficient to pay the full preferential liquidation amount
per share required to be paid to the holders of Company's Preferred Stock, the
entire amount of assets of the Company available for distribution to
shareholders shall be paid up to their respective full liquidation amounts first
to the holders of Preferred Stock, then to any other series of preferred stock
hereafter authorized and issued, all of which amounts shall be distributed
ratably among holders of each such series of preferred stock, and the Common
Stock shall receive nothing. A reorganization or any other consolidation or
merger of the Company with or into any other corporation, or any other sale of
all or substantially all of the assets of the Company, shall not be deemed to be
a liquidation, dissolution or winding up of the Company within the meaning of
this Section 3, and the Preferred Stock shall be entitled only to: (i) the
rights provided in any agreement or plan governing the reorganization or other
consolidation, merger or sale of assets transaction; (ii) the rights contained
in the Nevada Revised Statutes; and (iii) the rights contained in other Sections
hereof.
Dividend Provisions
4. The holders of shares of Preferred Stock shall not be entitled to receive any
dividends.
Reservation of Stock to be issued upon Conversion
5. The Company shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock solely for the purpose of
effecting the conversion of the shares of the Preferred Stock such number of its
shares of Common Stock as shall from time to time be sufficient, based on the
Conversion Rate then in effect, to effect the conversion of all then outstanding
shares of the Preferred Stock. If at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect the conversion
of all then outstanding shares of the Preferred Stock, then, in addition to all
rights, claims and damages to which the holders of the Preferred Stock shall be
entitled to receive at law or in equity as a result of such failure by the
Company to fulfill its obligations to the holders hereunder, the Company will
take any and all corporate or other action as may, in the opinion of its
counsel, be helpful, appropriate or necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose.
Notices
6. In the event of the establishment by the Company of a record of the holders
of any class of securities for the purpose of determining the holders thereof
who are entitled to receive any distribution, the Company shall mail to each
holder of Preferred Stock at least twenty (20) days prior to the date specified
therein a notice specifying the date on which any such record is to be taken for
the purpose of such distribution and the amount and character of such
distribution.
7. Any notices required by the provisions hereof to be given to the holders of
shares of Preferred Stock shall be deemed given if deposited in the United
States mail, postage prepaid and return receipt requested, and addressed to each
holder of record at its address appearing on the books of the Company or to such
other address of such holder or its representative as such holder may direct.
<PAGE>
6
Voting Provisions
8. Except as otherwise expressly provided or required by law, the Preferred
Stock shall have no voting rights.
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<PAGE>
7
IN WITNESS WHEREOF, the Company has caused this Certificate of Designation of
Series B Convertible Preferred Stock to be duly executed by its President and
attested to by its Secretary this 10th day of December, 1999 who, by signing
their names hereto, acknowledge that this Certificate of Designation is the act
of the Company and state to the best of their knowledge, information and belief,
under the penalties of perjury, that the above matters and facts are true in all
material respects.
ILINK TELECOM, INC.
"Amar Bahadoorsingh"
Amar Bahadoorsingh, President
"Amar Bahadoorsingh"
Amar Bahadoorsingh, Secretary
ACKNOWLEDGMENT;
STATE OF NEW YORK
CITY OF NEW YORK
On December 10, 1999 personally appeared before me, Amar Bahadoorsingh, to me
known, who acknowledged he executed the above instrument on behalf of said
Corporation.
My Commission Expires: 3/14/2000
"Tracy A. Phillips"
____________________________
NOTARY PUBLIC
<PAGE>
EXHIBIT A
CONVERSION CERTIFICATE
ILINK TELECOM, INC.
Series B Convertible Preferred Stock
The undersigned holder (the "Holder") is surrendering to iLink Telecom, Inc., a
Nevada corporation (the "Company"), one or more certificates representing shares
of Series B Convertible Preferred Stock of the Company (the "Preferred Stock")
in connection with the conversion of all or a portion of the Preferred Stock
into shares of Common Stock, $0.001 par value per share, of the Company (the
"Common Stock") as set forth below.
1. The Holder understands that the Preferred Stock was issued by the Company
pursuant to the exemption for registration under the United States Securities
Act of 1933, as amended (the "Securities Act"), provided by Regulation D
promulgated thereunder.
2. The Holder represents and warrants that all offers and sales of the Common
Stock issued to the Holder upon such conversion of the Preferred Stock shall be
made (a) pursuant to an effective registration statement under the Securities
Act, (in which case the Holder represents that a prospectus has been delivered)
(b) in compliance with Rule 144, or (c) pursuant to some other exemption from
registration.
Number of Shares of Preferred Stock being Converted:______________________
Applicable Conversion Rate:_______________________________________________
OR
Applicable Alternative Conversion Rate:___________________________________
Number of Shares of Common Stock To be issued:____________________________
Conversion Date:__________________________________________________________
Delivery instructions for certificates of Common Stock and for new
certificates representing any remaining shares of Preferred Stock:
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
___________________________________
Name of Holder - Printed
___________________________________
Signature of Holder
<PAGE>
THIS SUBSCRIPTION AGREEMENT IS EXECUTED IN RELIANCE UPON THE EXEMPTION PROVIDED
BY SECTION 4(2) AND REGULATION D, RULE 506 FOR TRANSACTIONS NOT INVOLVING A
PUBLIC OFFERING UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"). THIS OFFERING IS BEING MADE ONLY TO ACCREDITED INVESTORS.
-------------------------
SUBSCRIPTION AGREEMENT
-------------------------
THIS SUBSCRIPTION AGREEMENT (this "Agreement") has been executed by the
undersigned in connection with the private placement of up to a maximum of
400,000 shares of Common Stock, par value $0.001 (hereinafter referred to as the
"Common Stock"), of iLink Telecom, Inc., a corporation organized under the laws
of the State of Nevada (symbol "ILTE") (hereinafter referred to as the
"Company"). The Common Stock being sold pursuant to this Agreement has not been
registered under the Securities Act. The offer of the Common Stock and, if this
Subscription Agreement is accepted by the Company, the sale of Common Stock, is
being made in reliance upon Section 4(2) of the Securities Act. (All dollar
amounts in this Agreement are expressed in U.S. Dollars).
The undersigned Purchaser:
NAME: ___________________________________________________________
ADDRESS: ___________________________________________________________
___________________________________________________________
if applicable, a [Corporate][Partnership][Trust] organized under the laws of
_____________, (hereinafter referred to as the "Purchaser") hereby represents
and warrants to, and agrees with the Company as follows:
ARTICLE 1
SUBSCRIPTION
Subscription
1.1 The undersigned Purchaser hereby subscribes to purchase _______ shares of
Common Stock (the "Common Shares"), having a purchase price of $2.00 per Common
Share, at an aggregate purchase price of $________ (the "Subscription Funds").
Minimum Subscription
1.2 A minimum number of 100,000 Common Shares must be purchased by the
Purchaser.
Method of Payment
1.3 The Purchaser shall pay the Subscription Funds by delivering good funds in
United States Dollars by way of wire transfer of funds to the Company's
attorneys, Bartel Eng Linn & Schroder (the "Escrow Agent") pursuant to the terms
of the Escrow Instructions attached hereto as Annex I (the "Escrow
Instructions") concurrent with the execution and delivery of this
<PAGE>
2
Agreement to the Escrow Agent. By signing this Agreement, the Purchaser and the
Company each agree to all of the terms and conditions of, and become a party to,
the Escrow Instructions attached hereto, all of the provisions of which are
incorporated herein by this reference as if set forth in full. The wire transfer
instructions are:
BARTEL ENG LINN & SCHRODER TRUST ACCOUNT
Wells Fargo Bank
400 Capitol Mall
Sacramento, CA 95814
Telephone: (916) 440-4331
ABA No.: 121000248
Account No.: 0168-032878
On the date upon which the conditions precedent enumerated in Article 6
hereof are satisfied (the "Closing Date") the Company shall take up the
Subscription Funds and issue to the Purchaser a certificate or certificates
representing the Common Shares (the "Certificates") pursuant to Article 7
hereof. As stated in the Escrow Instructions, the Company and the Purchaser
agree that in the event that the Closing Date does not occur on or before
January 31, 2000 the Escrow Agent shall forthwith return the whole amount of the
Subscription Funds to the Purchaser. The Purchaser acknowledges that the
subscription for Common Shares hereunder may be rejected by the Company in its
sole discretion.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Representations and Warranties
2.1 The Purchaser represents and warrants in all material respects to the
Company, with the intent that the Company will rely thereon in entering into
this Agreement and in completing the transactions contemplated hereby, that:
(a) Accredited Investor. The Purchaser is an "accredited investor" as
that term is defined in Regulation D promulgated under the
Securities Act by virtue of being (initial all applicable responses)
_____ A small business investment company licensed by the U.S. Small
Business Administration under the Small Business Investment
Company Act of 1958,
_____ A business development company as defined in the Investment
Company Act of 1940,
_____ A national or state-chartered commercial bank, whether acting
in an individual or fiduciary capacity,
_____ An insurance company as defined in Section 2(13) of the
Securities Act,
_____ An investment company registered under the Investment Company
Act of 1940,
_____ An employee benefit plan within the meaning of Title I of the
Employee Retirement Income Security Act of 1974, where the
investment decision is made by a plan fiduciary, as defined in
Section 3(21) of such Act,
<PAGE>
3
which is either a bank, insurance company, or registered
investment advisor, or an employee benefit plan which has
total assets in excess of $5,000,000,
_____ A private business development company as defined in Section
202(a)(22) of the Investment Advisors Act of 1940,
_____ An organization described in Section 501(c)(3) of the Internal
Revenue Code, a corporation or a partnership with total assets
in excess of $5,000,000,
_____ A natural person (as opposed to a corporation, partnership,
trust or other legal entity) whose net worth, or joint net
worth together with his/her spouse, exceeds $1,000,000,
_____ Any trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the securities
offered, whose purchase is directed by a sophisticated person
as described in Section 506(b)(2)(ii) of Regulation D,
_____ A natural person (as opposed to a corporation, partnership,
trust or other legal entity) whose individual income was in
excess of $200,000 in each of the two most recent years (or
whose joint income with such person's spouse was at least
$300,000 during such years) and who reasonably expects an
income in excess of such amount in the current year, or
_____ A corporation, partnership, trust or other legal entity (as
opposed to a natural person) and all of such entity's equity
owners fall into one or more of the categories enumerated
above;
(b) Experience. The Purchaser is sufficiently experienced in financial
and business matters to be capable of evaluating the merits and
risks of its investments, and to make an informed decision relating
thereto, and to protect its own interests in connection with the
purchase of the Common Shares;
(c) Own Account. The Purchaser is purchasing the Common Shares for its
own account or for the account of beneficiaries for whom the
Purchaser has full investment discretion, each of which
beneficiaries is bound to all of the terms and provisions hereof
including all representations and warranties herein. The Purchaser
is purchasing the Common Shares for investment purposes only and not
with an intent or view towards further sale or distribution (as such
term is used in Section 2(11) of the Securities Act) thereof, and
has not pre-arranged any sale with any other purchaser;
(d) Not Underwriter. The Purchaser is not an underwriter, or dealer in,
the Common Shares, and the Purchaser is not participating, pursuant
to a contractual agreement, in a distribution of the Common Shares;
(e) Exemption. The Purchaser understands that the offer and sale of the
Common Shares is not being registered under the Securities Act based
on the exemption from registration provided by Rule 506 promulgated
under Section 4(2) of the Securities Act and that the Company is
relying on such exemption.
(f) Importance of Representations. The Purchaser understands that the
Common Shares are being offered and sold to it in reliance on an
exemption from the registration requirements of the Securities Act,
and that the Company is relying upon the truth and accuracy of the
representations, warranties, agreements,
<PAGE>
4
acknowledgments and understandings of the Purchaser set forth herein
in order to determine the applicability of such safe harbor and the
suitability of the Purchaser to acquire the Common Shares;
(g) No Registration. The Common Shares have not been registered under
the Securities Act and may not be transferred, sold, assigned,
hypothecated or otherwise disposed of, unless such transaction is
the subject of a registration statement filed with and declared
effective by the Securities and Exchange Commission (the "SEC") or
unless an exemption from the registration requirements under the
Securities Act, such as Rule 144, is available. The Purchaser
represents and warrants and hereby agrees that all offers and sales
of the Common Sharesshall be made only pursuant to such registration
or to such exemption from registration;
(h) Risk. The Purchaser acknowledges that the purchase of the Common
Sharesinvolves a high degree of risk, is aware of the risks and
further acknowledges that it can bear the economic risk of the
Common Shares, including the total loss of its investment;
(i) Current Information. The Purchaser has been furnished with or has
acquired copies of all requested information concerning the Company,
including the most recent financial statements of the Company;
(j) Independent Investigation. The Purchaser, in making the decision to
purchase the Preferred Shares subscribed for, has relied upon
independent investigations made by it and its purchaser
representatives, if any, and the Purchaser and such representatives,
if any, have prior to any sale to it, been given access and the
opportunity to examine all material contracts and documents relating
to this offering and an opportunity to ask questions of, and to
receive answers from, the Company or any person acting on its behalf
concerning the terms and conditions of this offering. The Purchaser
and its advisors, if any, have been furnished with access to all
materials relating to the business, finances and operation of the
Company and materials relating to the offer and sale of the Common
Shareswhich have been requested. The Purchaser and its advisors, if
any, have received complete and satisfactory answers to any such
inquiries;
(k) No Recommendation or Endorsement. The Purchaser understands that no
federal or state agency has passed on or made any recommendation or
endorsement of the Common Shares;
(l) The Purchaser. If the Purchaser is a partnership, corporation or
trust, the person executing this Agreement on its behalf represents
and warrants that
(i) he or she has made due inquiry to determine the truthfulness
of the representations and warranties made pursuant to this
Agreement, and
(ii) he or she is duly authorized (and if the undersigned is a
trust, by the trust agreement) to make this investment and to
enter into and execute this Agreement on behalf of such
entity;
(m) Non-Affiliate Status. The Purchaser and any affiliate of the
Purchaser represent, warrant and covenant that they are not an
affiliate of the Company; and
<PAGE>
5
(n) No Advertisement or General Solicitation. The sale of the Common
Shares has not been advertised through any article, notice or other
communication published in any newspaper, magazine, or similar media
or broadcast over television or radio; or through any seminar or
meeting whose attendees have been invited by any general
solicitation or general advertising.
Non-Merger and Survival
2.2 The representations and warranties of the Purchaser contained herein will be
true at the date of execution of this Agreement by the Purchaser and as of the
Closing Date in all material respects as though such representations and
warranties were made as of such times and shall survive the Closing Date and the
delivery of the Certificates.
Indemnity
2.3 The Purchaser agrees to indemnify and save harmless the Company from and
against any and all claims, demands, actions, suits, proceedings, assessments,
judgments, damages, costs, losses and expenses, including any payment made in
good faith in settlement of any claim (subject to the right of the Purchaser to
defend any such claim), resulting from the breach of any representation or
warranty of such party under this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 The Company represents and warrants in all material respects to the
Purchaser, with the intent that the Purchaser will rely thereon in entering into
this Agreement and in completing the transactions contemplated hereby, that:
(a) Listed Company Status. The Company is required to make current
filings with the SEC pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"), the Common
Stock is quoted on the NASD "Bulletin Board" and the Company has
received no notice, either oral or written, with respect to its
continued eligibility for such listing;
(b) Legality. The Company has the requisite corporate power and
authority to enter into this Agreement and to issue, sell and
deliver the Common Shares; this Agreement and the issuance, sale and
delivery of the Common Shareshereunder and the transactions
contemplated hereby have been duly and validly authorized by all
necessary corporate action by the Company; this Agreement and the
Common Shareshave been duly and validly executed and delivered by
and on behalf of the Company, and are valid and binding agreements
of the Company, enforceable in accordance with their respective
terms, except as enforceability may be limited by general equitable
principles, bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, or other laws affecting creditors'
rights generally. The Common Shares will not subject the holders
thereof to personal liability by reason of being such holders;
(c) Proper Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of its
jurisdiction of incorporation and is duly qualified as a foreign
corporation in all jurisdictions where the failure to be so
qualified would have a materially adverse effect on its business,
taken as whole;
<PAGE>
6
(d) No Legal Proceedings. There is no action, suit or proceeding before
or by any court or any governmental agency or body, domestic or
foreign, now pending or to the knowledge of the Company, threatened,
against or affecting the Company, or any of its properties or
assets, which might result in any material adverse change in the
condition (financial or otherwise) or in the earnings, business
affairs of business prospects of the Company, or which might
materially and adversely affect the properties or assets thereof;
(e) Non-Default. The Company is not in default in the performance or
observance of any material obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust or
other material instrument or agreement to which it is a party or by
which it or its property may be bound;
(f) No Misleading Statements. The information provided by the Company to
the Purchaser does not contain any untrue statement of a material
fact or omit to state any material fact;
(g) No Adverse Change. There has been no material adverse change in the
financial condition, earnings, business prospects of the Company;
(h) Absence of Non-Disclosed Facts. There is no fact known to the
Company (other than general economic conditions known to the public
generally) that has not been disclosed in writing to the Purchaser
that (i) could reasonably be expected to have a material adverse
effect on the condition (financial or otherwise) or in the earnings,
business affairs, business prospects, properties or assets of the
Company; or (ii) could reasonably be expected to materially and
adversely affect the ability of the Company to perform its
obligations pursuant to this Agreement;
(i) Non-Contravention. The execution and delivery of this Agreement and
the consummation of the issuance of the Common Shares and the
transactions contemplated by this Agreement do not and will not
conflict with or result in a breach by the Company of any of the
terms or provisions of, or constitute a default under the Articles
of Incorporation or By-laws of the Company, or any indenture,
mortgage, deed of trust, or other material agreement or instrument
to which the Company is a party or by which it or any of its
properties or assets are bound, or any existing applicable decrees,
judgment or order of any court, Federal or State regulatory body,
administrative agency or other domestic governmental body having
jurisdiction over the Company or any of its properties or assets.
Non-Merger and Survival
3.2 The representations and warranties of the Company contained herein will be
true at the date of execution of this Agreement by the Company and as of the
Closing Date in all material respects as though such representations and
warranties were made as of such times and shall survive the Closing Date and the
delivery of the Certificates.
Indemnity
3.3 The Company agrees to indemnify and save harmless the Purchaser from and
against any and all claims, demands, actions, suits, proceedings, assessments,
judgments, damages, costs, losses and expenses, including any payment made in
good faith in settlement of any claim (subject to the right of the Company to
defend any such claim), resulting from the breach of any representation,
warranty or covenant of such party under this Agreement.
<PAGE>
7
ARTICLE 4
COVENANTS OF THE COMPANY
Covenants of the Company
4.1 The Company covenants and agrees with the Purchaser that:
(a) Filings. The Company shall make all necessary filings in connection
with the sale of the Commmon Shares as required by the laws and
regulations of all appropriate jurisdictions and securities
exchanges;
(b) Compliance with Section 13. The Company shall, from and after the
Closing Date, use its best efforts to comply with the requirements
of Section 13 of the Exchange Act and maintain the quotation of the
Common Stock on the NASD "Bulletin Board" or other quotation medium
which is senior to the NASD "Bulletin Board";
(c) Registration Statement. No later than ninety (90) days after the
Closing Date, the Company shall file a registration statement on
Form SB-2 (or similar form) under the Securities Act and under all
applicable Blue Sky laws covering the Common Shares and shall use
its best efforts to cause such registration statement to be declared
effective by the SEC at the earliest practicable date, all at the
Company's sole cost and expense. Such best efforts shall include
promptly responding to all comments received by the staff of the
SEC, and promptly preparing and filing amendments to such
registration statement which are responsive to the comments received
from the staff of the SEC, and in no event later than twenty-one
(21) days from receipt by the Company of the comments of the staff
of the SEC. Such registration statement shall name the Purchaser as
a selling shareholder and shall provide for the sale of the Common
Shares by the Purchaser from time to time directly to purchasers or
in the over-the-counter market or through or to securities brokers
or dealers that may receive compensation in the form of discounts,
concessions, or commissions. The Company shall provide the Purchaser
with such number of copies of the prospectus as shall be reasonably
requested to facilitate the sale of the Common Shares. None of the
foregoing shall in any way limit the Purchaser's rights to sell the
Common Shares in reliance on an exemption from the registration
requirements under the Securities Act in connection with a
particular transaction;
(d) Currency of Registration Statement. The Company shall use its best
efforts to maintain the currency of the registration statement filed
with the SEC and under all applicable Blue Sky laws in respect of
the Common Shares and shall in any event remain effective for up to
12 months from the Closing Date or until all of the Common Shares
are sold, whichever is earlier; and
(e) Opinion. In the event the Company fails to register the resale of
the Common Shares, the Company will, upon the presentation of an
opinion of the Purchaser's counsel, allow the Purchaser to offer and
sell the Common Shares in reliance on the provisions of Rule 144
provided that the holding period and other requirements of such Rule
144 are met.
<PAGE>
8
Survival
4.2 The covenants set forth in this Article shall survive the Closing for the
benefit of the Purchaser.
ARTICLE 5
ISSUANCE OF CERTIFICATES
On or prior to the Closing Date, the Company will prepare and issue one or
more Certificates for the Common Stock registered in such name or names as
specified by the Purchaser and cause the same to be delivered to the Escrow
Agent pursuant to the Escrow Instructions. Such Certificate(s) (unless a
registration statement is in effect as provided for in Article 4 hereof or
another exemption may be relied upon) shall bear a legend in substantially the
following form:
THESE SECURITIES HAVE BEEN ISSUED PURSUANT TO THE SECTION 4(2)
EXEMPTION TO THE REGISTRATION PROVISIONS UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THESE SECURITIES CANNOT BE TRANSFERRED, OFFERED,
OR SOLD UNLESS THE SECURITIES ARE REGISTERED UNDER THE SECURITIES
ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT IS AVAILABLE.
ARTICLE 6
CONDITIONS PRECEDENT
Conditions Precedent to the Company's Obligation to Sell
6.1 The Purchaser understands and agrees that the Company's obligation to sell
the Common Shares is conditioned upon the following being satisfied on or before
the Closing Date:
(a) Acceptance and Delivery of Agreement. The receipt and acceptance by
the Company of this Agreement, as evidenced by execution of this
Agreement by the President or any Vice President or the Chief
Financial Officer of the Company, and the delivery thereof to the
Escrow Agent; and
(b) Payment in Full. Delivery to the Escrow Agent by the Purchaser of
good funds as payment in full for the purchase of the Common Shares.
Conditions Precedent to the Purchaser's Obligation to Purchase
6.2 The Company understands that the Purchaser's obligation to purchase the
Common Shares is conditioned upon the following being satisfied on or before the
Closing Date:
(a) Acceptance and Delivery of Agreement. The receipt by the Escrow
Agent of the Company's acceptance of this Agreement as provided in
Paragraph 6.1(a) above;
(b) Receipt of Certificates. The receipt by the Escrow Agent of the
Certificate or Certificates representing the Common Shares; and
<PAGE>
9
(c) Acquisition of 9278 Distributor Inc. The closing of the acquisition
by the Company of 9278 Distributor Inc., a New York corporation.
ARTICLE 7
CLOSING
Closing shall be effected pursuant to the Escrow Instructions through the
delivery of the Subscription Funds to the Company by the Escrow Agent, together
with a duly executed copy of this Agreement, the delivery of certificates
evidencing the Common Stock to the Purchaser (or the Purchaser's Representative)
by the Escrow Agent, together with a duly executed copy of this Agreement, and
the delivery of the duly executed Irrevocable Instructions to the Transfer Agent
by the Escrow Agent.
ARTICLE 8
GENERAL PROVISIONS
Governing Law
8.1 This Agreement shall be governed by and construed under the law of the State
of New York without regard to its choice of law provision. Any disputes arising
out of, in connection with, or with respect to this Agreement, the subject
matter hereof, the performance or non-performance of any obligation hereunder,
or any of the transactions contemplated hereby shall be adjudicated in a Court
of competent civil jurisdiction sitting in the City of New York, New York and
nowhere else.
Successors and Assigns
8.2 This Agreement shall inure to the benefit of and be binding on the
respective successors and assigns of the parties hereto.
Indemnification of Escrow Agent
8.3 Each of the Company and the Purchaser jointly and severally agree that the
Escrow Agent has no liability as a result of any fraudulent or unlawful conduct
of any other party, and jointly and severally agree to indemnify and hold the
Escrow Agent harmless against any losses, claims, damages, or liabilities, to
which it may become subject pursuant to its actions under this Agreement or the
Escrow Instructions, except as to any loss, claim, damage, or liability arising
out of or is based upon any action not taken in good faith, or any action or
omission that constitutes gross negligence or willful misconduct by the Escrow
Agent.
Execution by Counterparts and Facsimile
8.4 This Agreement may be executed in counterparts and by facsimile, each of
which when executed by any party will be deemed to be an original and all of
which counterparts will together constitute one and the same Agreement.
[Remainder of page intentionally left blank]
<PAGE>
10
SIGNATURE PAGE FOR INDIVIDUAL PURCHASER
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and that he, she or they have executed this Subscription
Agreement on this __________ day of ______________, _____.
____________________________________ __________________________________
Printed Name Signature
____________________________________ __________________________________
Printed Name Signature
Agreed to this _____ day of ____________, ___________:
ILINK TELECOM, INC.
By:_________________________________
Title:______________________________
This is page __ to the Subscription Agreement dated as of the above date between
iLink Telecom, Inc. and the above Purchaser.
<PAGE>
11
SIGNATURE PAGE FOR ENTITIES
IN WITNESS WHEROF, the undersigned represents that the foregoing statements are
true and that it caused this Subscription Agreement to be duly executed on its
behalf on this _______ day of ___________, ______.
____________________________________
Printed Name of Purchaser
By:_________________________________
(Signature of Authorized Person)
____________________________________
(Printed Name and Title)
Agreed to this ________ day of __________, _____:
ILINK TELECOM, INC.
By:_________________________________
Title:______________________________
This is page __ to the Subscription Agreement dated as of the above date between
iLink Telecom, Inc. and the above Purchaser.
<PAGE>
12
Full Name and Address of Purchaser for Registration Purposes:
NAME:_________________________________________________________________________
ADDRESS:______________________________________________________________________
TEL.NO.:______________________________________________________________________
FAX NO.:______________________________________________________________________
CONTACT NAME:_________________________________________________________________
Delivery Instructions (if different from Registration Name):
NAME:_________________________________________________________________________
ADDRESS:______________________________________________________________________
TEL.NO.:______________________________________________________________________
FAX NO.:______________________________________________________________________
CONTACT NAME:_________________________________________________________________
SPECIAL INSTRUCTIONS:_________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
<PAGE>
THIS SUBSCRIPTION AGREEMENT IS EXECUTED IN RELIANCE UPON THE EXEMPTION PROVIDED
BY SECTION 4(2) AND REGULATION D, RULE 506 FOR TRANSACTIONS NOT INVOLVING A
PUBLIC OFFERING UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"). THIS OFFERING IS BEING MADE ONLY TO ACCREDITED INVESTORS.
----------------------
SUBSCRIPTION AGREEMENT
----------------------
THIS SUBSCRIPTION AGREEMENT (this "Agreement") has been executed by the
undersigned in connection with the private placement of up to a maximum of 2,500
shares of Series B Convertible Preferred Stock, par value $0.001 (hereinafter
referred to as the "Preferred Stock"), of iLink Telecom, Inc., a corporation
organized under the laws of the State of Nevada (symbol "ILTE") (hereinafter
referred to as the "Company"). The Preferred Stock being sold pursuant to this
Agreement has not been registered under the Securities Act. In addition to such
other terms as are set forth in this Agreement, the terms on which the Preferred
Stock may be converted into shares of the Company's common stock (the "Common
Stock") and the other terms of the Preferred Stock are set forth in the
Certificate of Designation for the Preferred Stock attached hereto as Annex I
(the "Certificate of Designation"). The offer of the Preferred Stock and, if
this Subscription Agreement is accepted by the Company, the sale of Preferred
Stock, is being made in reliance upon Section 4(2) of the Securities Act. (All
dollar amounts in this Agreement are expressed in U.S. Dollars).
The undersigned Purchaser:
NAME: ___________________________________________________________
ADDRESS: ___________________________________________________________
___________________________________________________________
if applicable, a [Corporate][Partnership][Trust] organized under the laws of
________________, (hereinafter referred to as the "Purchaser") hereby represents
and warrants to, and agrees with the Company as follows:
ARTICLE 1
SUBSCRIPTION
Subscription
1.1 The undersigned Purchaser hereby subscribes to purchase __________ shares of
Preferred Stock (the "Preferred Shares"), having a purchase price of $1,000 per
Preferred Shares, at an aggregate purchase price of $_________ (the
"Subscription Funds").
Minimum Subscription
1.2 A minimum number of 50 Preferred Shares must be purchased by the Purchaser.
<PAGE>
2
Method of Payment
1.3 The Purchaser shall pay the Subscription Funds by delivering good funds in
United States Dollars by way of wire transfer of funds to the Company's
attorneys, Bartel Eng Linn & Schroder (the "Escrow Agent") pursuant to the terms
of the Escrow Instructions attached hereto as Annex II (the "Escrow
Instructions") concurrent with the execution and delivery of this Agreement to
the Escrow Agent. By signing this Agreement, the Purchaser and the Company each
agree to all of the terms and conditions of, and become a party to, the Escrow
Instructions attached hereto, all of the provisions of which are incorporated
herein by this reference as if set forth in full. The wire transfer instructions
are:
BARTEL ENG LINN & SCHRODER TRUST ACCOUNT
Wells Fargo Bank
400 Capitol Mall
Sacramento, CA 95814
Telephone: (916) 440-4331
ABA No.: 121000248
Account No.: 0168-032878
On the date upon which the conditions precedent enumerated in Article 6
hereof are satisfied (the "Closing Date") the Company shall take up the
Subscription Funds and issue to the Purchaser a certificate or certificates
representing the Preferred Shares (the "Certificates") pursuant to Article 7
hereof. As stated in the Escrow Instructions, the Company and the Purchaser
agree that in the event that the Closing Date does not occur on or before
January 31, 2000 the Escrow Agent shall forthwith return the whole amount of the
Subscription Funds to the Purchaser. The Purchaser acknowledges that the
subscription for Preferred Shares hereunder may be rejected by the Company in
its sole discretion.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Representations and Warranties
2.1 The Purchaser represents and warrants in all material respects to the
Company, with the intent that the Company will rely thereon in entering into
this Agreement and in completing the transactions contemplated hereby, that:
(a) Accredited Investor. The Purchaser is an "accredited investor" as
that term is defined in Regulation D promulgated under the
Securities Act by virtue of being (initial all applicable responses)
_____ A small business investment company licensed by the U.S. Small
Business Administration under the Small Business Investment
Company Act of 1958,
_____ A business development company as defined in the Investment
Company Act of 1940,
_____ A national or state-chartered commercial bank, whether acting
in an individual or fiduciary capacity,
_____ An insurance company as defined in Section 2(13) of the
Securities Act,
<PAGE>
3
_____ An investment company registered under the Investment Company
Act of 1940,
_____ An employee benefit plan within the meaning of Title I of the
Employee Retirement Income Security Act of 1974, where the
investment decision is made by a plan fiduciary, as defined in
Section 3(21) of such Act, which is either a bank, insurance
company, or registered investment advisor, or an employee
benefit plan which has total assets in excess of $5,000,000,
_____ A private business development company as defined in Section
202(a)(22) of the Investment Advisors Act of 1940,
_____ An organization described in Section 501(c)(3) of the Internal
Revenue Code, a corporation or a partnership with total assets
in excess of $5,000,000,
_____ A natural person (as opposed to a corporation, partnership,
trust or other legal entity) whose net worth, or joint net
worth together with his/her spouse, exceeds $1,000,000,
_____ Any trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the securities
offered, whose purchase is directed by a sophisticated person
as described in Section 506(b)(2)(ii) of Regulation D,
_____ A natural person (as opposed to a corporation, partnership,
trust or other legal entity) whose individual income was in
excess of $200,000 in each of the two most recent years (or
whose joint income with such person's spouse was at least
$300,000 during such years) and who reasonably expects an
income in excess of such amount in the current year, or
_____ A corporation, partnership, trust or other legal entity (as
opposed to a natural person) and all of such entity's equity
owners fall into one or more of the categories enumerated
above;
(b) Experience. The Purchaser is sufficiently experienced in financial
and business matters to be capable of evaluating the merits and
risks of its investments, and to make an informed decision relating
thereto, and to protect its own interests in connection with the
purchase of the Preferred Shares;
(c) Own Account. The Purchaser is purchasing the Preferred Shares and
the shares of Common Stock to be issued upon the conversion of the
Preferred Shares (the "Common Shares", and together with the
Preferred Shares the "Securities") for its own account or for the
account of beneficiaries for whom the Purchaser has full investment
discretion, each of which beneficiaries is bound to all of the terms
and provisions hereof including all representations and warranties
herein. The Purchaser is purchasing the Securities for investment
purposes only and not with an intent or view towards further sale or
distribution (as such term is used in Section 2(11) of the
Securities Act) thereof, and has not pre-arranged any sale with any
other purchaser;
(d) Not Underwriter. The Purchaser is not an underwriter, or dealer in,
the Securities, and the Purchaser is not participating, pursuant to
a contractual agreement, in a distribution of the Securities;
(e) Exemption. The Purchaser understands that the offer and sale of the
Preferred Shares is not being registered under the Securities Act
based on the exemption
<PAGE>
4
from registration provided by Rule 506 promulgated under Section
4(2) of the Securities Act and that the Company is relying on such
exemption.
(f) Importance of Representations. The Purchaser understands that the
Preferred Shares are being offered and sold to it in reliance on an
exemption from the registration requirements of the Securities Act,
and that the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and
understandings of the Purchaser set forth herein in order to
determine the applicability of such safe harbor and the suitability
of the Purchaser to acquire the Securities;
(g) No Registration. The Preferred Shares have not been registered under
the Securities Act and may not be transferred, sold, assigned,
hypothecated or otherwise disposed of, unless such transaction is
the subject of a registration statement filed with and declared
effective by the Securities and Exchange Commission (the "SEC") or
unless an exemption from the registration requirements under the
Securities Act, such as Rule 144, is available. The Purchaser
represents and warrants and hereby agrees that all offers and sales
of the Securities shall be made only pursuant to such registration
or to such exemption from registration;
(h) Risk. The Purchaser acknowledges that the purchase of the Securities
involves a high degree of risk, is aware of the risks and further
acknowledges that it can bear the economic risk of the Securities,
including the total loss of its investment;
(i) Current Information. The Purchaser has been furnished with or has
acquired copies of all requested information concerning the Company,
including the most recent financial statements of the Company;
(j) Independent Investigation. The Purchaser, in making the decision to
purchase the Preferred Shares subscribed for, has relied upon
independent investigations made by it and its purchaser
representatives, if any, and the Purchaser and such representatives,
if any, have prior to any sale to it, been given access and the
opportunity to examine all material contracts and documents relating
to this offering and an opportunity to ask questions of, and to
receive answers from, the Company or any person acting on its behalf
concerning the terms and conditions of this offering. The Purchaser
and its advisors, if any, have been furnished with access to all
materials relating to the business, finances and operation of the
Company and materials relating to the offer and sale of the
Securities which have been requested. The Purchaser and its
advisors, if any, have received complete and satisfactory answers to
any such inquiries;
(k) No Recommendation or Endorsement. The Purchaser understands that no
federal or state agency has passed on or made any recommendation or
endorsement of the Preferred Shares;
(l) The Purchaser. If the Purchaser is a partnership, corporation or
trust, the person executing this Agreement on its behalf represents
and warrants that
(i) he or she has made due inquiry to determine the truthfulness
of the representations and warranties made pursuant to this
Agreement, and
<PAGE>
5
(ii) he or she is duly authorized (and if the undersigned is a
trust, by the trust agreement) to make this investment and to
enter into and execute this Agreement on behalf of such
entity;
(m) Non-Affiliate Status. The Purchaser and any affiliate of the
Purchaser represent, warrant and covenant that they are not an
affiliate of the Company; and
(n) No Advertisement or General Solicitation. The sale of the Preferred
Shares has not been advertised through any article, notice or other
communication published in any newspaper, magazine, or similar media
or broadcast over television or radio; or through any seminar or
meeting whose attendees have been invited by any general
solicitation or general advertising.
Non-Merger and Survival
2.2 The representations and warranties of the Purchaser contained herein will be
true at the date of execution of this Agreement by the Purchaser and as of the
Closing Date in all material respects as though such representations and
warranties were made as of such times and shall survive the Closing Date and the
delivery of the Certificates.
Indemnity
2.3 The Purchaser agrees to indemnify and save harmless the Company from and
against any and all claims, demands, actions, suits, proceedings, assessments,
judgments, damages, costs, losses and expenses, including any payment made in
good faith in settlement of any claim (subject to the right of the Purchaser to
defend any such claim), resulting from the breach of any representation or
warranty of such party under this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 The Company represents and warrants in all material respects to the
Purchaser, with the intent that the Purchaser will rely thereon in entering into
this Agreement and in completing the transactions contemplated hereby, that:
(a) Listed Company Status. The Company is required to make current
filings with the SEC pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"), the Common
Stock is quoted on the NASD "Bulletin Board" and the Company has
received no notice, either oral or written, with respect to its
continued eligibility for such listing;
(b) No Senior Preferred Stock. The Company does not have any issued and
outstanding shares of preferred stock other than the Preferred Stock
to be issued hereunder or to other purchasers pursuant to agreements
having the same terms as this Agreement;
(c) Terms of Preferred Stock. The terms of Preferred Stock shall be as
set forth in the form of Certificate of Designation delivered to the
Purchaser as Annex I hereto;
(d) Legality. The Company has the requisite corporate power and
authority to enter into this Agreement and to issue, sell and
deliver the Securities; this Agreement and the issuance, sale and
delivery of the Securities hereunder and the transactions
contemplated hereby have been duly and validly authorized by all
<PAGE>
6
necessary corporate action by the Company; this Agreement and the
Securities have been duly and validly executed and delivered by and
on behalf of the Company, and are valid and binding agreements of
the Company, enforceable in accordance with their respective terms,
except as enforceability may be limited by general equitable
principles, bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, or other laws affecting creditors'
rights generally. The Securities will not subject the holders
thereof to personal liability by reason of being such holders;
(e) Proper Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of its
jurisdiction of incorporation and is duly qualified as a foreign
corporation in all jurisdictions where the failure to be so
qualified would have a materially adverse effect on its business,
taken as whole;
(f) No Legal Proceedings. There is no action, suit or proceeding before
or by any court or any governmental agency or body, domestic or
foreign, now pending or to the knowledge of the Company, threatened,
against or affecting the Company, or any of its properties or
assets, which might result in any material adverse change in the
condition (financial or otherwise) or in the earnings, business
affairs of business prospects of the Company, or which might
materially and adversely affect the properties or assets thereof;
(g) Non-Default. The Company is not in default in the performance or
observance of any material obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust or
other material instrument or agreement to which it is a party or by
which it or its property may be bound;
(h) No Misleading Statements. The information provided by the Company to
the Purchaser does not contain any untrue statement of a material
fact or omit to state any material fact;
(i) No Adverse Change. There has been no material adverse change in the
financial condition, earnings, business prospects of the Company;
(j) Absence of Non-Disclosed Facts. There is no fact known to the
Company (other than general economic conditions known to the public
generally) that has not been disclosed in writing to the Purchaser
that (i) could reasonably be expected to have a material adverse
effect on the condition (financial or otherwise) or in the earnings,
business affairs, business prospects, properties or assets of the
Company; or (ii) could reasonably be expected to materially and
adversely affect the ability of the Company to perform its
obligations pursuant to this Agreement;
(k) Transfer Restrictions. Upon the conversion of the Preferred Shares
pursuant to this Agreement and the Certificate of Designation, and
provided that a registration statement in respect of the Common
Shares is in effect as required under all applicable securities
laws, such Common Shares shall be freely transferable on the books
and records of the Company. In the event conversion is effected
prior to effectiveness of a registration statement, or in compliance
with Rule 144, the certificates representing the Common Shares shall
bear the legend stated in Article 5 hereof; and
(l) Non-Contravention. The execution and delivery of this Agreement and
the consummation of the issuance of the Securities and the
transactions contemplated
<PAGE>
7
by this Agreement do not and will not conflict with or result in a
breach by the Company of any of the terms or provisions of, or
constitute a default under the Articles of Incorporation or By-laws
of the Company, or any indenture, mortgage, deed of trust, or other
material agreement or instrument to which the Company is a party or
by which it or any of its properties or assets are bound, or any
existing applicable decrees, judgment or order of any court, Federal
or State regulatory body, administrative agency or other domestic
governmental body having jurisdiction over the Company or any of its
properties or assets.
Non-Merger and Survival
3.2 The representations and warranties of the Company contained herein will be
true at the date of execution of this Agreement by the Company and as of the
Closing Date in all material respects as though such representations and
warranties were made as of such times and shall survive the Closing Date and the
delivery of the Certificates.
Indemnity
3.3 The Company agrees to indemnify and save harmless the Purchaser from and
against any and all claims, demands, actions, suits, proceedings, assessments,
judgments, damages, costs, losses and expenses, including any payment made in
good faith in settlement of any claim (subject to the right of the Company to
defend any such claim), resulting from the breach of any representation,
warranty or covenant of such party under this Agreement.
ARTICLE 4
COVENANTS OF THE COMPANY
Covenants of the Company
4.1 The Company covenants and agrees with the Purchaser that:
(a) Reserved Common Stock. For so long as any Preferred Shares held by
the Purchaser shall remain outstanding, the Company covenants and
agrees with the Purchaser that it will at all times fully reserve
from its authorized but un-issued Common Stock such sufficient
number of shares of Common Stock to permit the conversion in full of
the Preferred Shares;
(b) Filings. The Company shall make all necessary filings in connection
with the sale of the Preferred Shares as required by the laws and
regulations of all appropriate jurisdictions and securities
exchanges;
(c) Compliance with Section 13. The Company shall, from and after the
Closing Date, use its best efforts to comply with the requirements
of Section 13 of the Exchange Act and maintain the quotation of the
Common Stock on the NASD "Bulletin Board" or other quotation medium
which is senior to the NASD "Bulletin Board";
(d) Registration Statement. No later than ninety (90) days after the
Closing Date, the Company shall file a registration statement on
Form SB-2 (or similar form) under the Securities Act and under all
applicable Blue Sky laws covering the Common Shares and shall use
its best efforts to cause such registration statement to be declared
effective by the SEC at the earliest practicable date, all at the
Company's sole cost and expense. Such best efforts shall include
promptly responding to all
<PAGE>
8
comments received by the staff of the SEC, and promptly preparing
and filing amendments to such registration statement which are
responsive to the comments received from the staff of the SEC, and
in no event later than twenty-one (21) days from receipt by the
Company of the comments of the staff of the SEC. Such registration
statement shall name the Purchaser as a selling shareholder and
shall provide for the sale of the Common Shares by the Purchaser
from time to time directly to purchasers or in the over-the-counter
market or through or to securities brokers or dealers that may
receive compensation in the form of discounts, concessions, or
commissions. The Company shall provide the Purchaser with such
number of copies of the prospectus as shall be reasonably requested
to facilitate the sale of the Common Shares. None of the foregoing
shall in any way limit the Purchaser's rights to sell the Common
Shares in reliance on an exemption from the registration
requirements under the Securities Act in connection with a
particular transaction;
(e) Currency of Registration Statement. The Company shall use its best
efforts to maintain the currency of the registration statement filed
with the SEC and under all applicable Blue Sky laws in respect of
the Common Shares to be issued upon conversion of the Preferred
Shares until the conversion or deemed conversion of the Preferred
Shares and shall in any event remain effective for up to 12 months
from the Closing Date or until all of the Common Shares are sold,
whichever is earlier;
(f) Opinion. In the event the Company fails to register the resale of
the Common Shares, the Company will, upon the presentation of an
opinion of the Purchaser's counsel, allow the Purchaser to offer and
sell the Common Shares in reliance on the provisions of Rule 144
provided that the holding period and other requirements of such Rule
144 are met; and
(g) Irrevocable Instructions. The Company will on the Closing Date
provide its Transfer Agent with irrevocable instructions as attached
hereto as Annex III (the "Irrevocable Instructions"), to issue one
or more certificate(s) representing the Common Shares to the
Purchaser upon the conversion of the Preferred Shares in accordance
with the Certificate of Designation at any time without any
restrictive legend or stop transfer instructions and without any
further instruction or opinion from the Company, provided that the
Company is presented with certificates representing the Preferred
Shares to be converted, together with an executed Conversion
Certificate in the form of Exhibit A attached to the Certificate of
Designation, and provided further that the Common Shares are being
sold pursuant to the registration statement on Form SB-2 or other
registration statement as set forth in this Article 4.
Survival
4.2 The covenants set forth in this Article shall survive the Closing for the
benefit of the Purchaser.
ARTICLE 4A
LIMITATION ON CONVERSION
Notwithstanding anything to the contrary set forth herein and for greater
certainty the terms of the Certificate of Designation attached hereto, the
Company and the Purchaser covenant and agree that in no event shall the
Purchaser be entitled to convert any portion of the Preferred
<PAGE>
9
Stock in excess of the portion of the Preferred Stock collectively that, upon
giving effect to such conversion, would cause the aggregate number of shares of
Common Stock beneficially owned by the Purchaser and its affiliates to exceed
9.9% of the outstanding shares of the Common Stock following such conversion.
ARTICLE 5
ISSUANCE OF CERTIFICATES
On or prior to the Closing Date, the Company will prepare and issue one or
more Certificates for the Preferred Stock registered in such name or names as
specified by the Purchaser and cause the same to be delivered to the Escrow
Agent pursuant to the Escrow Instructions. Such Certificate(s) and the
certificate(s) representing the Common Shares (unless a registration statement
is in effect as provided for in Article 4 hereof or another exemption may be
relied upon) shall bear a legend in substantially the following form:
THESE SECURITIES HAVE BEEN ISSUED PURSUANT TO THE SECTION 4(2)
EXEMPTION TO THE REGISTRATION PROVISIONS UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THESE SECURITIES CANNOT BE TRANSFERRED, OFFERED,
OR SOLD UNLESS THE SECURITIES ARE REGISTERED UNDER THE SECURITIES
ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT IS AVAILABLE.
ARTICLE 6
CONDITIONS PRECEDENT
Conditions Precedent to the Company's Obligation to Sell
6.1 The Purchaser understands and agrees that the Company's obligation to sell
the Preferred Shares is conditioned upon the following being satisfied on or
before the Closing Date:
(a) Acceptance and Delivery of Agreement. The receipt and acceptance by
the Company of this Agreement, as evidenced by execution of this
Agreement by the President or any Vice President or the Chief
Financial Officer of the Company, and the delivery thereof to the
Escrow Agent; and
(b) Payment in Full. Delivery to the Escrow Agent by the Purchaser of
good funds as payment in full for the purchase of the Preferred
Shares.
Conditions Precedent to the Purchaser's Obligation to Purchase
6.2 The Company understands that the Purchaser's obligation to purchase the
Preferred Shares is conditioned upon the following being satisfied on or before
the Closing Date:
(a) Acceptance and Delivery of Agreement. The receipt by the Escrow
Agent of the Company's acceptance of this Agreement as provided in
Paragraph 6.1(a) above;
(b) Receipt of Certificates. The receipt by the Escrow Agent of the
Certificate or Certificates representing the Preferred Shares;
<PAGE>
10
(c) Filing of Certificate of Designation. The filing of the Certificate
of Designation attached hereto as Annex I with the Secretary of
State of the State of Nevada on or before the Closing Date; and
(d) Acquisition of 9278 Distributor Inc. The closing of the acquisition
by the Company of 9278 Distributor Inc., a New York corporation.
ARTICLE 7
CLOSING
Closing shall be effected pursuant to the Escrow Instructions through the
delivery of the Subscription Funds to the Company by the Escrow Agent, together
with a duly executed copy of this Agreement, the delivery of certificates
evidencing the Preferred Stock to the Purchaser (or the Purchaser's
Representative) by the Escrow Agent, together with a duly executed copy of this
Agreement, and the delivery of the duly executed Irrevocable Instructions to the
Transfer Agent by the Escrow Agent.
ARTICLE 8
GENERAL PROVISIONS
Governing Law
8.1 This Agreement shall be governed by and construed under the law of the State
of New York without regard to its choice of law provision. Any disputes arising
out of, in connection with, or with respect to this Agreement, the subject
matter hereof, the performance or non-performance of any obligation hereunder,
or any of the transactions contemplated hereby shall be adjudicated in a Court
of competent civil jurisdiction sitting in the City of New York, New York and
nowhere else.
Successors and Assigns
8.2 This Agreement shall inure to the benefit of and be binding on the
respective successors and assigns of the parties hereto.
Indemnification of Escrow Agent
8.3 Each of the Company and the Purchaser jointly and severally agree that the
Escrow Agent has no liability as a result of any fraudulent or unlawful conduct
of any other party, and jointly and severally agree to indemnify and hold the
Escrow Agent harmless against any losses, claims, damages, or liabilities, to
which it may become subject pursuant to its actions under this Agreement or the
Escrow Instructions, except as to any loss, claim, damage, or liability arising
out of or is based upon any action not taken in good faith, or any action or
omission that constitutes gross negligence or willful misconduct by the Escrow
Agent.
Execution by Counterparts and Facsimile
8.4 This Agreement may be executed in counterparts and by facsimile, each of
which when executed by any party will be deemed to be an original and all of
which counterparts will together constitute one and the same Agreement.
[Remainder of page intentionally left blank]
<PAGE>
11
SIGNATURE PAGE FOR INDIVIDUAL PURCHASER
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and that he, she or they have executed this Subscription
Agreement on this ________ day of ____________, ________.
____________________________________ __________________________________
Printed Name Signature
____________________________________ __________________________________
Printed Name Signature
Agreed to this _____ day of ____________, ____________:
ILINK TELECOM, INC.
By:_________________________________
Title:______________________________
This is page 11 to the Subscription Agreement dated as of the above date between
iLink Telecom, Inc. and the above Purchaser.
<PAGE>
12
SIGNATURE PAGE FOR ENTITIES
IN WITNESS WHEROF, the undersigned represents that the foregoing statements are
true and that it caused this Subscription Agreement to be duly executed on its
behalf on this ________ day of ____________, _____.
____________________________________
Printed Name of Purchaser
By:_________________________________
(Signature of Authorized Person)
____________________________________
(Printed Name and Title)
Agreed to this ________ day of __________, _____:
ILINK TELECOM, INC.
By:_________________________________
Title:______________________________
This is page 12 to the Subscription Agreement dated as of the above date between
iLink Telecom, Inc. and the above Purchaser.
<PAGE>
13
Full Name and Address of Purchaser for Registration Purposes:
NAME:_________________________________________________________________________
ADDRESS:______________________________________________________________________
TEL.NO.:______________________________________________________________________
FAX NO.:______________________________________________________________________
CONTACT NAME:_________________________________________________________________
Delivery Instructions (if different from Registration Name):
NAME:_________________________________________________________________________
ADDRESS:______________________________________________________________________
TEL.NO.:______________________________________________________________________
FAX NO.:______________________________________________________________________
CONTACT NAME:_________________________________________________________________
SPECIAL INSTRUCTIONS:_________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
